Peri-urban poverty: Can micro-finance be a panacea?

Abstract

Micro-finance has been identified as a major means for poverty reduction. Micro-finance covers products like micro-credit, micro-insurance and micro-savings. The study which was conducted in ten selected communities in the Ashaiman Municipality in the greater Accra region of Ghana was aimed at exploring the impact of microcredit on household level poverty and welfare. The population was all beneficiaries of microcredit programmes in the municipality. A simple random selection was used to select 120 beneficiaries of microcredit programmes in the selected communities. The study showed that microcredit had some impact on household income and welfare which led to improvement in their standard of living and opportunity to save money. They were able to contribute to their children’s education, purchase household assets, make improvements in the household diet, received appreciation from family members and had self-confidence in decision making on issues concerning household welfare. In all, they also felt empowered. Though the study recommends the need to increase the size of micro-credits to clients, it however, recommends that MFIs should rather concentrate efforts towards savings. Mobilization as capital accumulation has a greater potential to reduce poverty. Savings provides an asset for the individual’s capacity for investment in future production.