THE SOCIO-ECONOMIC IMPACT OF SINAPI ABA SAVINGS AND LOANS ON SMALL AND MEDIUM – SCALE ENTERPRISES IN THE TAMALE METROPOLIS

Abstract

Small and Medium-scale Enterprises (SMEs) play a prominent role in the improvement of the socio-economic conditions of both individuals and societies all over the world because they are critical in poverty reduction. Therefore, the financing of SMEs is vital to all countries, hence the role of microfinance institutions. This study investigated the socio-economic impact of Sinapi Aba Savings and Loans (SASLs) on SMEs in the Tamale metropolis. The mixed method methodology (quantitative and qualitative methods) was used for the study. The survey data collected was coded and analysed using SPSS Version 16 and the 2007 Microsoft Excel computer software package while the results from the key informant interviews are analysed manually by developing themes and presenting narratives. The main findings of the study are that access to microcredit has led to business growth and improvement in working capital of SMEs. Also there has been improvement in the socioeconomic lives of the individual entrepreneurs, their families, society and the Tamale Metropolis as a whole as a result of the services SASLs offer SME operators. High interest rate, long procedures in accessing microcredit as well as limited grace period for repayment were identified as some challenges faced in accessing the services of SASLs. It is recommended that interest rates be reduced for SMEs, procedures in accessing microcredit should be made less bureaucratic and ample time should be given to microcredit beneficiaries to invest funds received before the commencement of repayment.