EFFECT OF THE MICROFINANCE AND SMALL LOANS CENTER (MASLOC) ON POVERTY ALLEVIATION IN THE TAMALE METROPOLIS

Abstract

Poverty is a well-known canker in Africa, the West African sub-region and Ghana as a unit. The concept is defined by the inability to meet the minimum requirements for optimum livelihood and good standard of living. Access to credit facilities and basic financial services in all parts of a nation (both rural and urban) is essential for business development, entrepreneurship as well as smoothing consumption amidst economic shocks. The Microfinance and Small Loans Center (MASLOC) is a state agency set up to provide microcredit to individuals and small to medium scale ventures across the nation. This study aims to assess the effects of MASLOC in poverty alleviation in the Tamale Metropolis using change in livelihood of beneficiaries of MASLOC services from 2006 to date as proxy. 280 purposefully selected MASLOC beneficiaries were surveyed using face-to-face interviews. Key informant interviews were employed to engage MASLOC officials to provide background data on the constraints in service provision. The study was a mixed method cross sectional study adopting the 'principle of data triangulation to minimize the shortcomings of one-time cross sectional surveys. The findings showed that there was a significant difference in mean livelihood score before and after the MASLOC initiative. 71.8% of respondents had positive changes in livelihood as a result of the MASLOC programme. This translated into fruitful investments in child education, business start-up and expansion, savings culture and social dividends such as food security and health insurance. However, income and gender were significant confounders of the calculated change in livelihood. In addition, access to the loan package was influenced by Institutional preference for group-based lending, gender, access to mainstream credit and political influences. Repayment problems (short repayment periods, low loan recovery) were ranked as the major constraint of the MASLOC scheme in the study area. This was followed by loan disbursement challenges including late disbursement and smaller number of times the loans were received. Another challenge underlying poor loan recovery was the attitude of beneficiaries toward the scheme and its given funds. The money was seen as free gifts or political motivations to 'party faithfuls'. In conclusion, MASLOC micro finance and microcredit scheme has been very instrumental in transforming lives of the poor in society. The government and livelihood enhancement centered NGOs should therefore make more efforts to make loans more available through the MASLOC scheme to help reach out to more beneficiaries in order to help mitigate against poverty and its effects on. livelihood. MASLOC should also work on more effective ways to recover funds and to improve on the repayments process to help manage the funds effectively for a sustainable scheme.