Poverty Reduction in Ghana: Microfinance and Small Loan Centre (MASLOC) in Perspective

Abstract

<p class=MsoListParagraph style=margin:0in;margin-bottom:.0001pt;mso-add-space: auto;text-align:justify;text-indent:0in;line-height:normal;mso-list:l0 level1 lfo1; mso-mirror-indents:yes> Access to adequate and affordable credit for businesses remains one of the key challenges to local economic development in Ghana despite efforts by both government and private sector organizations to address the problem. Issues of availability of financial institutions, proximity to clients, effectiveness of service provision, adequacy of loans granted, and timeliness and cost of services provided are among factors that have been deemed critical in addressing this perennial problem. A multitude of methodologies are being used to provide financial services such as savings, credit, and insurance to relatively poor clients, yet they follow the same philosophy of group lending, forced savings, small loan amounts and short repayment periods. To give practical meaning to poverty reduction agenda, the government of Ghana launched the Microfinance and Small Loans Centre (MASLOC) in 2006. Earlier studies acknowledge the difficulties that still exist regarding access to finance, domestic resource and the support necessary for Small and Medium Enterprises (SMEs) to grow and contribute to the economy. This research is therefore aimed at investigating how MASLOC is performing its mandate of expanding micro-credit to the economically active poor in the Tamale Metropolis. A case study approach was used as the research strategy by the researcher. The researcher employed the representative single case study, primarily designed to elicit information from a cross-section of local stakeholders (especially beneficiaries and management) of MASLOC in the Tamale Metropolis. The case study approach was employed due to the fact that it provided a basis for an empirical enquiry that allows the researcher to investigate and understand the role of MASLOC in the economic life of its credit beneficiaries. It created the avenue to use multiple sources of evidence, thus improving the quality of data for the study as it allows triangulation. It was found that there are some misgivings about MASLOC scheme. These were deduced from both clients and officials of MASLOC. In many respect, the establishment of MASLOC have made some strides in the area of accessibility to micro credit and fighting the indicators of poverty. It is however, worth noting that much of the efforts have seemingly resulted into uncoordinated stakeholder action and decision making due to small amount of credit lack of skills and capacity to utilize loans and political interference. It was therefore noted that without a clear and concrete effort at diversifying the loan portfolio, encouraging micro saving among clients, monitoring the performance of beneficiaries and depoliticizing the scheme, using MASLOC to enhance accessibility of individuals, groups and households will remain a vision on paper. <p class=MsoListParagraph style=margin:0in;margin-bottom:.0001pt;mso-add-space: auto;text-align:justify;text-indent:0in;line-height:normal;mso-list:l0 level1 lfo1; mso-mirror-indents:yes> Keywords: Affordable Credit; Financial Services; Low Income; Microfinance; Poverty Reduction