THE SOCIO-ECONOMIC IMPACT OF MICROCREDIT ON BENEFICIARIES OF TECHIMAN MUNICIPALITY: A CASE STUDY OF THE OPPORTUNITY INTERNATIONAL SAVINGS AND LOANS LIMITED

Abstract

The role of Microcredit institutions in poverty reduction in developing economies has been increasingly realized over the years. This study exammes the socio-economic impact of microcredit on beneficiaries of Techiman Municipality. It was noted that majority of respondents have agreed on the definition of microcredit as "A broad term that includes deposits, loans, payment services and insurance to the poor" . Again an interesting thing to note is that, during the focus group discussions it was realized that , many of them perceive microcredit to mean "Giving of assistance in the form of loans and capacity building in other to develop individual existing businesses and repay within the stated time of agreement" Another area of interest is the relationship between microcredit and poverty reduction. This was confirmed by majority of the respondents that , microcredit do not help enough in reducing poverty and some gave reasons that it even burdens the poor. Many were of the View that delay in processing clients loan request was as a result of bureaucratic nature of loan acquisition, inability of applicants to provide enough collateral, the institution does not have adequate funding for on-lending to their clients, inability of applicants to complete loan application form on time and statutory requirement for both primary and secondary requirement reduces the bank's ability to lend more. Finally, a number of challenges were identified by the beneficiaries as realized from the field survey conducted. Among these were short periods of recovery, small amount of loans, problem of group loans and changes in business.