Assessing the relevance of micro finance credit to the Informal small businesses in Jukwa in the central region of Ghana

Abstract

Credit facilities continue to pose a major threat to the survival of the SME sector. Traditional banks have failed to advance credit facilities to the SMEs due to challenges with collateral securities and information. This study sought to assess the relevance of microfinance in terms of meeting credit needs and reducing poverty among the small business owners of Jukwa in the Central Region. Thirty-one (31) respondents were sampled for the study. Descriptive statistics were used for the presentation of the findings. Questionnaire was also used to collect data for the study. Analyses of the responses revealed that majority of the respondents have felt positive impact of microfinance activities. It is found that, through microfinance credit, considerable amount of business capital has been accessed either for start-up or for expansion. Family burdens among the respondents were seen to decrease owing to microfinance credit. Others also felt the positive impact as it helped them in support of their children’s education. The key problem associated with microcredit, according to the respondents was the exorbitant interest rate charged by the microfinance institutions. This situation prevented many potential beneficiaries from subscribing to microfinance credit. It is recommended that the microfinance institutions lower their rates so as to attract more clients for their businesses.