An assessment of the micro finance industry in Ghana (a survey of selected Savings and Loans Institutions in Kumasi)
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Date
2008-11-17
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Abstract
Micro Finance Institutions are institutions having structures that provide access to credit for the poor, often with serious limitations in terms of cost, risk, and convenience which must be identified and resolved so that it can reach the vast majority of potential customers.
The purpose of this study was to investigate into the major challenges affecting the sustainability of micro finance schemes and to identify the prospects of selected
institutions in Kumasi, Ghana. The study was guided by the following research
objectives: (1) To identify the client base characteristics and client focus of savings and loans institutions in Kumasi. (2) To identify the major challenges affecting customer
patronage of savings and loans institutions. (3) To identify the major challenges affect the sustainability of savings and loans schemes in Kumasi. (4) To identify future
opportunities and recommendations for savings and loans institutions in Kumasi.
Primary data was collected from the customers and management of the selected savings and loans institutions in the Kumasi metropolis. These included Garden city, Opportunity international, First allied and Pacific savings and loans institutions. These Institutions are registered and operate micro finance mainstream services.
The findings of the study revealed that majority of the customers were women who were deposit oriented,, however the institutions are gradually shifting from their original target of serving the very poor since customers who qualify for credit will have to make periodic deposits before warranting support, thus presupposing that clients must be in a stable form of business. (Formal or informal)
Customers identified long loan processing, times, rigid repayment methods, training, monitoring and high interest rate as the major challenges. Furthermore management described default rates inadequate data on clients, poor credit methods, institutional management, high interest rates, and extending services to rural areas and institutional sustainability as challenges confronting the industry.
In forecasting future opportunities for the industry it was realized that a vibrant regulatory authority, extending, services to rural areas, designing tailored services, collaborations within the micro finance industry and partnering with NGOs, will increase
confidence and. trust between clients and MFIs. Moreover a nationwide awareness campaign will help reach the vast majority of potential customers in the country.
Description
A thesis presented to the Department of Banking and Finance, College of Art and Social Sciences, Kwame Nkrumah University of Science and Technology in partial
fulfilment of the requirements for the final MBA degree in Banking and Finance, 2008