Poverty reduction efforts in Ghana: A study of the social investment fund microfinance programme in the Mfantseman municipality

Abstract

The Mfantseman Community Bank is one of the participating financial institutions through which the Social Investment Fund microfinance was channeled to the poor. Low recovery rate of loans had rather been a great challenge to the bank. However, while the bank complained of the non-payment of loans by beneficiaries, beneficiaries in turn criticised the bank of poor service delivery. Consequent to this, the study sought to examine the role of the Social Investment Fund’s microfinance programme in poverty reduction in the Mfantseman Municipality. Purposive and accidental sampling methods were used in the study and a descriptive study design was adopted. The study covered the SIF, the Mfantseman Community Bank, the Municipal Assembly and 39 beneficiary groups. The study established that some best practices were undertaken in the operationalisation of the scheme thereby yielding benefits for the beneficiaries. This notwithstanding, there were several challenges that were encountered. The study found that microfinance is able to reduce poverty when well designed and implemented. A well designed scheme has a mix of components of training of beneficiaries, disbursing loans in a suitable season of production, and the use of a functional group among other things. It was recommended that beneficiaries needed to diligently apply the loans to their businesses in order to generate the expected income and be able to manage the incomes prudently to improve upon their livelihoods and therefore reduce poverty.