An impact assessment of microfinance institutions on women entrepreneurs in small and medium enterprises (SMEs)

TABLE OF CONTENT

CERTIFICATION

ABSTRACT

LIST OF TABLES

LIST OF FIGURES

LIST OF ABBREVIATIONS

ACKNOWLEDGEMENT

DEDICATION

INTRODUCTION
1.0 BACKGROUND OF THE STUDY
1.1 STATEMENT OF THE PROBLEM
1.2 RESEARCH OBJECTIVES
1.3 JUSTIFICATION OF THE STUDY
1.4 METHODOLOGY
1.5 SCOPE OF STUDY
1.6 LIMITATIONS OF THE STUDY
1.7 ORGANIZATION OF THE STUDY

CHAPTER TWO LITERATURE REVIEW
2.0 INTRODUCTION
2.1 CONCEPTUAL DEFINITIONS
2.1.1 MICROFINANCE
2.1.2 APPROACHES TO MICROFINANCE
2.1.3 MICRO CREDIT
2.1.4 MICRO INSURANCE
2.2 PRODUCT AND SERVICES OF MFIS
2.2.1 FINANCIAL SERVICES
2.2.2 ENTERPRISE DEVELOPMENT SERVICES
2.2.3 SOCIAL INTERMEDIATION
2.2.4 SOCIAL SERVICES
2.3 EVOLUTION OF MICROFINANCE IN GHANA
2.4 MICROFINANCE INSTITUTIONS
2.4.1 OBJECTIVES OF MICROFINANCE INSTITUTIONS
2.4.2 TYPES OF MFIs IN GHANA
2.4.3 REGULATORY FRAMEWORK FOR MFIs OPERATION INGHANA
2.5 WHY MFIs TARGET WOMEN ENTREPRENEURS
2.6 CHALLENGES WOMEN ENTREPRENEUR IN SMEs FACE IN ACCESSING CREDIT FROM MFIs
2.7 GENERAL OVERVIEW OF THE SME SECTOR
2.8.0 IMPACT ASSESSMENT
2.8.1 Cost and Capacity of impact Assessments
2.9 LEVELS OF IMPACT ASSESSMENT

CHAPTER THREE METHODOLOGY
3.0 INTRODUCTION
3.1 RESEARCH DESIGN
3.2 METHODS OF DATA COLLECTION
3.3 SAMPLE AND SAMPLE PROCEDURE FOR DATA COLLECTION
3.4 DATA ANALYSIS
3.5 PROFILE OF THE ORGANIZATION

CHAPTER FOUR DATA PRESENTATION, ANALYSIS AND DISCUSSION
4.0 INTRODUCTION
4.1.0 PRODUCT OFFERED BY SAT
TABLE 4.0: PRODUCT OF SAT ACCESSED
4.2.0 IMPACT ASSESSMENT OF MICROFINANCE AT BUSINESSES LEVEL
Table 4.1: IMPACT OF MICROFINANCE AT BUSINESS LEVEL
4.2.1 IMPACT OF MICROFINANCE AT THE HOUSEHOLD LEVEL
Table 4.2: IMPACT OF MICROFINANCE AT HOUSE HOLD LEVEL
4.2.2 IMPACT OF MICROFINANCE AT SOCIAL AND POLITICAL LEVEL
Table 4.3: IMPACT OF MICROFINANCE AT SOCIAL AND POLITICAL LEVEL
4.3.0 CHALLENGES WOMEN ENTREPRENEUR FACED WHEN ACCESSING THE PRODUCTS OF MFI
4.3.1 PERCENTAGE OF INTEREST RATE CHARGE BY THE MFI
Table 4.4: Percentage of interest rate charge by your MFI
4.3.2 DURATION FOR LOAN PROCESSING
Table 4.5: DURATION FOR LOAN PROCESSING
4.3.3 SATISFACTION WITH THE PERIOD WITHIN WHICH LOAN WAS OBTAIN
4.3.4 MODE OF REPAYMENT
4.3.5 EFFECT OF MODE OF REPAYMENT ON BUSINESS
4.3.6 TYPE OF COLLATERAL SECURITY DEMANDED BY MFI
Table 4.6:
4.3.7 THE EFFECT OF COLLATERAL REQUIREMENT ON THE ABILITY TO ACQUIRE LOAN FROM MFI
TABLE 4.7: THE EFFECT OF COLLATERAL REQUIREMENT ON THE ABILITY TO ACQUIRE LOAN FROM MFI
4.4 CHALLENGES MFI FACES WHEN DEALING WITHWOMEN ENTREPRENEURS
4.5 PERFORMANCE RATING OF MFI BY RESPONDENTS
Table 4.8: PERFORMANCE RATING OF SAT BY RESPONDENTS

CHAPTER FIVE SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSIONS
5.3 RECOMMENDATIONS

REFERENCES

LIST OF TABLES PAGES

TABLE 4.0: PRODUCT OF SAT ACCESSED

TABLE 4.1: IMPACT OF MICROFINANCE AT BUSINES LEVEL

TABLE 4.2: IMPACT OF MICROFINANCE AT HOUSEHOLD LEVEL

TABLE 4.3: IMPACT OF MICROFINANCE AT SOCIAL AND POLITICAL LEVEL

TABLE 4.4: PERCENTAGE OF INTEREST CHARGE BY MFI

TABLE 4.5: DURATION FOR LOAN PROCESSING

TABLE 4.6: TYPE OF COLLATERAL SECURITY DEMANDED BY MFI

TABLE 4.7: THE EFFECT OF COLLATERAL REQUIREMENT ON THE ABILITY TO ACQUIRE LOAN FROM MFI

TABLE 4.8: PERFORMANCE RATING OF SAT BY RESPONDENTS

LIST OF FIGURES PAGES

FIGURE 4.O: PRODUCT ACCESSED BY WOMEN ENTREPRENEURS

FIGURE 4.1: CHALLENGES FACED WHEN ACCESSING THE PRODUCT OF MFI

FIGURE 4.2: INTEREST RATE CHARGE BY MFI

FIGURE 4.3: DURATION FOR LOAN PROCESSING

FIGURE 4.4: SATISFACTION WITH THE LOAN PROCESSING PERIOD

FIGURE 4.5: MODE OF REPAYMENT

FIGURE 4.6: EFFECT OF MODE OF REPAYM.ENT ON BUSINESS

FIGURE 4.7: THE EFFECT OF COLLATERAL REQUIREMENT ON THE ABILITY TO ACQUIRE LOAN FROM MFI

FIGURE 4.8: PERFORMANCE RATING OF SAT BY RESPONDENTS

LIST OF ABBREVIATIONS

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CERTIFICATION

We hereby declare that this submission is our own work towards the Bsc. Degree in Administration ( Banking and Finance option) and to the best of our knowledge it does not contain any material published by another person or material accepted for the award of any other degree of the University except where due acknowledgements has been made in the text

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ABSTRACT

This research study investigates the impact assessment of microfinance on women entrepreneurs in SMEs. The researchers used case study, questionnaire as an instrument of primary data collection and secondary data. Statistical Package for Social Scientist (SPSS) and Microsoft Excel were used in data presentation and analysis. Random sampling of women entrepreneurs were used to select a sample size of sixty (60) respondents. For clear analysis, the study centers on three broad variables for impact assessments which are business, household and socio- political

The study reveals that microfinance has a positive impact on women entrepreneurs in relation to their business, household, socially and politically. The research also found out that the level of interest rate charged is a potential contribution to loan delinquency and the demand of collateral securities is a challenge to women entrepreneurs in their quest to access loan from MFIs Also, the researcher contains recommendations to MFIs and women entrepreneurs in SMEs in the Kumasi Metropolis

ACKNOWLEDGEMENT

First, we would like to thank God Almighty for giving us the grace and the opportunity to offer A Bachelor’s Degree programme. We would also like to appreciate our supervisor Mr. P. K. Oppong-Boakye of KNUST School of Business for all the help, guidance and effort he put at our disposal to help us complete this work. Again, we would like to thank Sinapi Aba Trust and Mr. Edward Akosah head of SMEs at SAT, who through his tireless effort helped us in making this dissertation a success.

We would like to thank the women clients of Sinapi Aba Trust who sacrificed their time to respond to our questionnaires

Also, we thank our parents who have supported us up to this stage, without your support we would not have got this far. God bless you.

Finally, to all authors whose works have been consulted are recognized for their good contributions.

DEDICATION

This dissertation is dedicated to God Almighty who through His love and goodness has brought us to the end of our University education .We also dedicate it to loved ones who has been faithful friends to us throughout our stay on campus.

CHAPTER ONE INTRODUCTION

1.0 BACKGROUND OF THE STUDY

Microfinance is not a new concept. It dates back in the 19th century from an obscure experiment in Bangladesh 30 years ago; microfinance has become a worldwide movement as a development activity, a way of helping poor people out of poverty (Ditcher, 2006). In light of its prominent role in development economics, Buckley (1997) described it as the newest darling of the donor community, while Karnani (2007) portrays it as the newest silver bullet for alleviating poverty and Greer (2008) and Gupta and Aubuchon (2008) claim that microfinance shines as a proven way to improve the lives of the poor. Microfinance is identified as a liberating force and an important instrument in fighting poverty (Nobel Prize committee, 2006). Accordingly, by the late 1990s, microfinance had become the darling boy of most donor agencies and subsequently received a chunk of the budget (Buckley, 1997). This was also boosted by the United Nation’s declaration of 1997-2006 as a decade for the eradication of poverty when money lenders were informally performing the role of now formal financial institutions.

The 2006 Microfinance Summit Campaign Report estimates that there are now more than 3,000 microfinance institutions, serving more than 100 million poor people in developing countries; the total cash turnover of these institutions world-wide is estimated at $2.5 billion and the potential for new growth is outstanding.

In the early years of microfinance, most organizations lending to the poor were funded by private or government grants. In the1990s, it became apparent that microfinance institutions would be unable to sustain their rapid growth rates if they depended solely on grants for funding.

Many microfinance institutions started to restructure their operations to make themselves attractive to investors.

In recent years, many institutional and high net worth investors have begun to invest in microfinance. Attracted by the high growth rates, funds focused on lending to microfinance institutions were created. Today, major banks such as Morgan Stanley, Deutsche Bank and Citigroup have begun to offer products and services that enable investments in microfinance. The creation of SMEs generates employment but these enterprises are short lived and consequently are bound to die after a short while causing those who gained job positions to lose them and even go poorer than how they were. It should be noted that microfinance is not a panacea but it is a main tool that foster development in developing countries. It is known worldwide that the poor cannot borrow from the banks. Banks do not lend to them because they do not have what is required to be granted a loan or to be provided with other bank services. The lack of financial power is a contributing factor to most of the societal problems. These problems emanate from poverty and it is known that with poverty one is bound to suffer so many consequences ranging from lack of good health care system, education and nutrition. Microfinance has proved this bank concept to be wrong. They target the poor who are considered risky but the repayment rate turns to be positive as compared with the regular commercial banks (Zeller and Sharma, 1998). Researchers have viewed microfinance in different dimensions. Microfinance gives people new opportunities by helping them to get and secure finances so as to equalize their chances and make them responsible for their own future. It broadens the horizons and thus plays both economic and social roles by improving the living conditions of the people (Microfinance Radio Netherlands, 2010). These improvements are in a nutshell to alleviate poverty, and according to this project, it will be seen from the point of impact assessment on women in small and medium size enterprises (SMEs) and focusing mostly in the rural and urban areas.

Ghana has a population of 23.5 million, about half of whom live in the rural areas. Poverty has declined from 52 percent in 1992 to 28 percent in 2006, and Ghana is on course to exceed the 2015 Millennium Development Goals (MDGs) of halving poverty (World Bank, 2008). Most of these women live in poor communities both in the rural and urban areas of the country. They engage in mostly micro enterprise and find it difficult accessing credit. The only category of financial institution that largely provides access to credit for the women is the Microfinance Institutions (MFIs). Between December 1997 and December 2005, the number of microfinance institutions increased from 618 to 3,133. The number of people who received credit from these institutions rose from 13.5million to 113.3 million (84% of them being women) during the same period (Daley- Harris, 2006).

The informal sector of our country has great potential to serve as the engines of economic growth since it employs higher percentage of Ghana’s labor. A report by International Monetary Fund shows that the informal sector could contribute to the expansion of businesses in Ghana if the financial system is strong and small and medium enterprises can easily access credit from financial institutions. (IMF Country Report on Ghana, May 2003).

Over the years, Microfinance sector has thrived and evolved into its current states as a result of government financial policies and programs undertaken by different government since independence. Among these policies are:

- The provision of subsidized credits in 1950’s.
- The establishment of Agricultural Development Bank in 1965 to address the problem of Agricultural sector and fisheries
- Establishment of Rural Community banks and the introduction of regulations such as commercial banks being required to set aside 20% of the total portfolio, to promote lending to Agricultural and small scale industries in the 1970’s and 1980’s.
- Shifting from a restrictive financial sector regime to a liberalized regime in 1986.
- Promulgation of PNDC Law 328 in 1991 to allow the establishment of different categories of non-bank financial institutions, including savings and loans companies and credits unions.

Although microfinance is not a panacea for poverty reduction and its related development challenges, when properly harnessed it can make sustainable contributions through financial investment leading to the empowerment of people, which in turn promotes confidence and self-esteem, particularly for women.

The impact of microfinance in Ghana is a subject worthy of serious examination for a number of reasons. Since the inception of MFIs in Ghana their activities have grown from strength to strength although up to date data on MFIs in Ghana are not readily available.

This study therefore focuses on one MFI in the Kumasi metropolis to ascertain the impact their services has have on the growth of women in SMEs.

1.1 STATEMENT OF THE PROBLEM

Ghana has experienced an exponential growth of MFIs whose target markets are the active poor within the society. These individuals do not have easy access to credits from the conventional banks as a result of collateral requirements and high transaction costs. The informal sector is the backbone of Ghana’s development since it constitutes a larger sector of economy. Currently, the market is saturated with MFIs, about 262 credit unions, 135 rural banks as at May, 2009 which are in the business of providing micro loans to the informal sector. This study seeks to know the active role and impact these MFIs are contributing to women in SMEs.

There have been numerous complaints from micro entrepreneurs about insufficient credit facilities. This research looked at what MFIs are doing in the informal sector since MFIs are saturated in the market and their missions have been to help micro entrepreneurs especially women.

Also it is unclear whether the administrative practices of the MFIs support their effort or create additional hurdles for SMEs in need of financing for the development of their businesses since most clients default in repayment of loans.

1.2 RESEARCH OBJECTIVES

The objectives of our study are:

- To identify the products offered by Sinapi Aba Trust and specific products for women entrepreneurs.
- To assess the impact of products and services offered by Sinapi Aba Trust on women entrepreneurs.
- To know the challenges facing women entrepreneurs in accessing the products.
- To find out the challenges SAT faces in providing services to women entrepreneurs.

1.3 JUSTIFICATION OF THE STUDY

In trying to justify why the current study is important, it is vital to mention that researchers have found this area of study very important to the development of the socio-economic activities in developing countries and their contributions to the development of small and medium size businesses in Ghana. Extensive research has been carried out on the role of the Microfinance Institutions. This research will therefore focus on Impact Assessment of MFIs on women entrepreneurs in SMEs which has not been exploited in terms of its contributions to the development of small and medium size businesses and particularly in the informal sector domain. A study of this nature is equally very important because it is going to enlighten the government and the public on the role MFIs are playing in the SMEs sector since it is in partnership with some international donor agencies.

Microfinance as a whole provides the rural population a means to have access to financial services in their localities to boost their living standards in a sustainable manner in line with the millennium development goals of alleviating poverty in developing countries. They can contribute in the fight against poverty by improving the agricultural sector which is the main source of living to the inhabitants of such developing nations. Thus it will pave a way forward for potential MFIs wishing to help in the sustainable development of SMEs to understand the difficulties they may come across and how they can succeed in their endeavors.

1.4 METHODOLOGY

The study used primary data. Quantitative and qualitative methods were used to analyze the collected data. The group also used case study, interviews and administer questionnaires to a predefined sample size of their clients and random sampling was used.

1.5 SCOPE OF STUDY

Microfinance Institutions are scattered in the entire geographical landscape of Ghana. Some MFIs in Kumasi Metropolis were analyzed, looking at its contributions to women entrepreneurs in SMEs and the benefits derived from the product and services of these institutions.

1.6 LIMITATIONS OF THE STUDY

The uncooperative behavior on the part of some of the respondents in relation to answering of questionnaires and adhering to the appointment time given was also a challenge.

There was language barrier between the researchers and the respondents, in that there was difficulty in translating the exact information from Twi to English.

1.7 ORGANIZATION OF THE STUDY

The study is organized in five chapters as follows.

Chapter one provides general background to the study. It also provides the statement of problem in terms of research questions. Again, it sets out the objectives of the study and provides justification for the objectives.

Chapter two reviewed pertinent literature on the impact assessment of microfinance in the context of women in SMEs. Both theoretical and empirical issues are reviewed in the literature.

Chapter three discusses the methodology of the study.

Chapter four looks at data presentation, analysis and discussion of empirical results.

The final chapter, which is chapter five, summarizes the main findings of the study, concludes and provides recommendations.

CHAPTER TWO LITERATURE REVIEW

2.0 INTRODUCTION

Even though there are now perhaps thousands of microfinance programs serving millions of people, impact evaluations are not as common as they ought to be. As a field, we still lack continuing hard information about what works well and what does not, and what impacts microfinance has on micro entrepreneurs in Ghana. This section covers and defines key terms as used in the study. This chapter covers the definitions and the need for impact assessment studies in relation to Microfinance Institutions and women entrepreneurs in small and medium enterprise; current and major authors view on the techniques used in impact assessment. Methodological issues in undertaking Impact Assessment (IA) studies depends on a mixture of research methods chosen and gives the degree of reliability and rigidity to data collection for the study. The design of the impact assessment in relation to triangulation of information from different sources has immense impact on the reliability and credibility of the study.

This section also mentions tools available for Impact Assessment studies and the importance of using these tools as guidance and not as a template. The design of IA study in relation to selection of research method and tools to undertake IA studies is basically due to resources available in terms of cost and capacity. This has been the major limitations in undertaking IA studies especially for MFIs.

In most developing countries microfinance has been used as one of the tools for development, as such most development project has microfinance as one of its components. The impact of these microfinance projects in relation to the partner institutions and their clients, sometimes called beneficiaries has been up for discussions among policy makers, developing partners and the practitioners.

Microfinance is hailed as a tool for poverty alleviation and is one of the major strategies to achieve the Millennium Development Goals (MDGs). This is because access to financial services assists poor households in meeting their basic financial needs, protects them against risks, and reduces their vulnerability to shocks, by building assets. Ultimately, this financial service develops their social and economic empowerment. It is further argued that financial services for the poor can help them turn their savings into sums large enough to satisfy a wide range of businesses, consumption, personal, social, and asset-building needs (Project Parivartan 2006). It also enables them to take advantage of economic opportunities, to build assets, and to reduce their vulnerability to external shocks that adversely affect their living standards, (Mejeha and Nwachukwu 2008, Ramirez 2006, Woroniuk and Schawk 1998).

Some of the main pertinent issues have been the low capacity of the participating microfinance institutions to undertake such exercises which are mostly carried out by their developing partners. There are issues related to the development projects themselves, the question of sustainability and whether these projects have had any positive and meaningful impact on the lives of the clients or it create a dependency and rather reduced their opportunity to come out of their poverty traps. Other school of thought has also questioned the methodologies used by microfinance institutions and microfinance projects in evaluating their impact, which vary greatly, Goldberg (2005).

2.1 CONCEPTUAL DEFINITIONS

2.1.1 MICROFINANCE

Micro finance, according to (Khawari, 2004) is “generally an umbrella term that refers to the provision of a broad range of services such as deposits, loans, payment services, money transfers and insurance to poor and low-income households and their micro-enterprises”.

Schreiner and Colombet (2001, p.339) define microfinance as “the attempt to improve access to small deposits and small loans for poor households neglected by banks.”

Robinson (2001) microfinance refers to small scale financial services for both credits and deposits- that are provided to people who farm or fish or herd; operate small or microenterprise where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries in both rural and urban areas.

CGAP (2003) defines it as the supply of loans, savings and other financial services to the poor.

Microfinance is the provision of credit and other financial services like savings and insurance to micro, small and medium scale enterprise (UNDP, Microstart Guide, 1997).

2.1.2 APPROACHES TO MICROFINANCE

According to Ledgerwood (1999), there are two approaches to microfinance. The first is what is termed the minimalist approach which looks at financial intermediation only. The second is an integrated approach which considers financial services as well as their interrelationships with social intermediation such as health, education, training and development. Microfinance tend to be economic in nature, such as its effect of facilitating development of businesses, increasing income, and decreasing dependence on outside help, these impacts have close ties to matters of global public agenda of making basic amenities accessible by the poor, in this case bridging the gap between the rich and the poor. Microfinance initiatives can easily go hand in hand with health services and outreach programs which lead to better economic prosperity. Local microfinance institutions can become the source of not only financial services but also a place to get information about basic needs of their clients. MFIs may have its main objective of providing financial services only but may offer limited social intermediation occasionally. In this case, the MFI is using a minimalist approach. On the other hand, an MFI uses an integrated approach when it takes a more holistic view of the clients. It is a combination of both financial and social intermediation, enterprise development and social services. An MFI chooses a minimalist or integrated approach depending on it main objectives and the circumstances (demand and supply) in which it is operating.

2.1.3 MICRO CREDIT

Micro credit is the practice of offering small, collateral free loans to members of co-operatives who otherwise would not have access to the capital necessary to begin small business. (Hobnssain 2002). Microcredit is thus one of the critical dimensions of the broad range of financial tools for the poor. An empirical research and further study show that the poor have the capacity to use loans effectively for income-generation, to save and re-pay loan.

Simanowitz and Brody (2004, p.1) argue that “micro-credit is a key strategy in reaching the MDGs and in building global financial systems that meet the needs of the most poor people”. Littlefield, Murduch and Hashemi (2003) report “micro credit is a critical contextual factor with strong impact on the achievements of the MDGs. Micro credit is unique among development interventions: it can deliver social benefits on an ongoing, permanent basis and on a large scale”.

2.1.4 MICRO INSURANCE

Micro insurance is a component of microfinance. It is defined in terms of client and not insurance furnished by a small institution. Churchill (2006) defines micro insurance as the protection of low-income people against specific perils in exchange for regular monetary payments (premiums) proportionate to the likelihood and cost of the risk involved. As with all insurance, risk pooling under micro insurance attempts to allow many individuals or groups to pool risks and redistribute the costs of the risky events within the pool. Microfinance institutions have played an active role in reducing or protecting against this vulnerability through providing credit for increasing income earning opportunities and through providing savings services to build up resources that can be drawn down in cases of emergencies.

2.2 PRODUCT AND SERVICES OF MFIS

2.2.1 FINANCIAL SERVICES

According to Ledgerwood (1999), the financial services generally include savings and credit but can also include other financial services such as insurance and payment services.

Savings products

Micro saving is also a microfinance service that allows impoverished individuals to safeguard money and other valuables items and even earn interest. It allows a lump sum to be enjoyed in future in exchange for a series of savings made now.

Current account: This is a non -interests bearing account for customers who deposit funds and withdraw anytime without notice.

Susu savings: This is a non-interest bearing account for those who do not have time to come to bank. It is a door to door service.

Loans products

Group loan : This is a loan normally given to a group of at least ten members and at most thirty members whose businesses are homogenous or different. The duration for payment is usually between four to six months but with the same interest rates.

Individual loans : This is loan granted to individuals who have savings account with the bank for at least one month. With this type of loan, the applicant needs a collateral security.

Susu loans : This is given to Susu deposit clients’ after three months of saving with the organization. No collateral security is required and repayment is made on daily basis basically with small amount.

Micro insurance

It is a system by which people, business and other financial organizations make a financial payment to share risk. Types of insurance produce include life insurance, Property insurance, Health insurance and Disability insurance.

2.2.2 ENTERPRISE DEVELOPMENT SERVICES

These services are often provided by MFIs adopting the integrated approach. These services are geared towards their clients’ business sustainability in terms of profit and cash flow. These in the long run help them to pay their loans without default. Services include:

Business training: Regular training is given to clients on management principles, pricing, book keeping skills, customer care and development, leadership development, financial management, community development, group solidarity and effective use of credit.

Orientation: Clients are oriented on the purpose of the loan, interest rate, penalty for default and terms of payment by loan officers.

Production training: This area of intervention helps clients to use their resources effectively and efficiently to ensure profitability and business expansion.

2.2.3 SOCIAL INTERMEDIATION

These include workshops for clients to enlighten them on essence of group formation, leadership training, and cooperative learning and also seek the opinion of their clients on the services they provide to them and the way forward.

2.2.4 SOCIAL SERVICES

Loan officers educate clients on social issues such as family planning, health and nutritional needs and adult education to explore opportunities to enhance the literacy and numeracy skills and abilities of clients.

2.3 EVOLUTION OF MICROFINANCE IN GHANA

The Microfinance concept is not new in Ghana. Available evidence also suggests that the first credit union in Africa was established in Northern Ghana in 1955, by a Canadian catholic missionary. Susu which is the current microfinance methodology is thought to have originated in Nigeria and spread to Ghana in the early 1990s.Microfinance has gone through four distinct faces worldwide of which Ghana is no exception. These stages are described below:

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