MICROFINANCE AND POVERTY ALLEVIATION AMONG RURAL WOMEN IN THE JIRAPA DISTRICT: THE ROLE OF SONZELE MICROFINANCE SCHEME

Abstract

Poverty reduction has been a major concern for successive governments in Ghana over the years because it is believed to be the universally accepted way of achieving economic growth in the country. The purpose of this study was to examine the role of Sonzele Rural Bank Limited (SRBL) in alleviating poverty through its microfinance scheme in the Jirapa District. A total of 550 women purposively selected from credit beneficiaries (CB) and non-credit beneficiaries (NCB). Both qualitative and quantitative data were collected using interview, questionnaires and focus group discussion. Percentages, frequencies and graphs were used to present the data. The study revealed that, access to micro-credit has led to improvement in the living conditions of beneficiaries in the area of health care, quality education to their wards and acquisition of assets after joining the Microfinance Institution (MFI) group as compared to non-beneficiaries. It was found that, the procedure and security requirements for accessing credit were modest and easier than the conventional banking. However, beneficiaries encountered various challenges in accessing and using the credit from the bank. SRBL used the group lending strategy to ensure higher repayment rate to reduce default. Despite the enhanced and visible roles assumed by these women due to the credit schemes, there were serious operational lapses: the loans given to the women were inadequate to start and run any viable income generating activity (IGA). In the light of the above, the following recommendations were made: group-based lending which minimizes problem of repayment must be adopted by lending institutions, an appreciable increase in the loans for clients to expand their businesses, training and developing credit officers and clients, need for strong collaboration between the government and microfinance institutions to reduce poverty in rural areas.