SAVINGS PRACTICES OF MICRO AND SMALL ENTERPRISES IN GHANA: A CASE STUDY OF WA MUNICIPALITY

Abstract

This study sought to determine the savings practices that support the survivalist operations of Micro and Small Enterprises (MSEs). A descriptive survey was conducted among 222 heterogeneous MSEs that were selected by the systematic sampling technique. A semi-structured interview guide was used to collect data and descriptive statistics were applied in data analysis and presentations. The findings of this study reveal that all MSEs save and do so largely on daily basis. Their most common method of saving is with the formal sector conventional banks, choosing safety as their main reason but with the greatest challenge of frequent deductions from their savings by the banks. The second most common method of saving is with the deposit collector of the informal sector because of easy accessibility to their cash but with the challenge of difficulty in accumulating large lump sums. Saving in cash at home is the most uncommon method of saving by MSEs. Coupled with this, the purposes to which MSEs save are by order of importance: business expansion, children’s education, and family and social obligations among others. This study’s unique finding was the very high MSEs’ daily rate of savings with hitherto antagonistic conventional banks and this necessitates further research into banks’ savings products, services and/or models that makes this possible. Recommendations are that banks should reduce charges on savings accounts to MSEs to enable them accumulate enough to meet their savings purposes. Also that Ghanaian pro-poor semi-formal microfinance institutions, designated to serve this market niche should re-visit their best practices of designing innovative and locally adapted microfinance methods/products that best meet MSEs savings purposes to attract them.