Ghana attained a middle income status in 2011 and adjudged one of the highest levels in sub-Saharan Africa for the past 15years which enabled the country to meet it MDGs before 2015 (Paula, Osorio, Battista, Battisa & Estruch 2012). Though this is a valuable progress in the reduction of poverty, rural areas still lag behind, more especially in the Northern part of the Country. The Poverty rate decreased from 50% in 1991 to 28.5% in 2006 indicating an increase in economic growth. However, the rural population is 3.3times poorer than the urban population as a result of inequalities of income distribution in the Country, (Paula et al 2012).
The cycle of poverty is seen mostly in rural dwellers of developing countries. This situation is not different when it comes to the Savelugu Nanton District (SND) in the Northern Region of Ghana, where women are seen as the most disadvantaged. These women generate very low income from their small businesses and investment due to low illiteracy rate and poor health related challenges. Besides, they lack expertise, credit facilities and financial resources to expand their small businesses. The few banks offering credit facilities are located in the Regional Capital, Tamale. This makes it difficult for women to have the required collateral security to access bank loans together with high loan interest charges and bureaucracies in accessing loans. As a result, life became difficult for these women because parents could not provide the basic needs of their children or send their children to school, leading to high dropout rate of school children as a result of financial difficulties. Most of the dropouts are in their youthful age. They travel to the urban centers in search of non-existing jobs locally translated as 'Kayaye,' leading to increase overcrowding within the urban centers. Some dropouts also engage in sexual practices leading to teenage pregnancies and other forms of social vices, while others stay at home idle.
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Over the years, Savelugu Nanton has experience tremendous improvement in Micro Finance Institutions to help address some of the above mentioned challenges, with intent to support in reducing poverty and improving the living standards of the poor, more especially women. Notable among the Microfinance Institutions currently operating in the District includes Tuma Kavi Microcredit Scheme, World Vision Microcredit scheme managed by APED, GDCP Microcredit scheme and European Union/GOG Microcredit Scheme. The benefits accruing as a result of their operations need to be examined to assess their impact in improving the living conditions of women. This has motivated the researcher to undertake a study on the Economic and Social benefits of Microcredit to women beneficiaries in the study area.
Agriculture is the main source of livelihood in Ghana, employing about 60% of the labour force which are mainly small landholders. The people of (SND) in the Northern Region of Ghana therefore depends solely on rain to enable them cultivate their land for survival. However, increased population and over cultivation has led to soil infertility sometimes leading to low productivity.
The cultural background of the people makes it difficult for women to make decisions as compared to their male counterparts or husbands. The women take part in gathering farm produce but do not have control over its usage. When they need to buy ingredients to cook for the family, they have to request for funds from their husbands making them financially dependent. Aguirre, Hoteit and Sabbagh (2012) indicated that many women have been economically underdeveloped or held back to the point where they are not even noticeable globally leading to idleness of valuable resources. In the Savelugu District for instance, women do not have authority to take decisions on their own without the express consent of their husbands meanwhile the poor women have basic family errands by paying of school fees, providing fuel (charcoal and firewood) for cooking, clothing themselves and responsible for their children's health care among other household needs. Relegating some of them to the background has led some in abject poverty thereby affecting their standard of living, (Rafiq, Abdullah, & Ahmadi, 2007).
Notwithstanding the above mentioned challenges, some of the women today have been able to engage themselves in several income generating activities as a result of the support of MFIs and FNGOs which is helping them contribute to the household needs of the family. The MFIs mostly target poor women groups with the intention of helping to reduce the level of poverty and improve living conditions. In the views of Nelson (1981), women engage in income generating activities purposely to provide for household expenses.
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The above issues motivated the researcher to investigate the economic and social benefits of MFIs on women in income generating activities such as Sheabutter processing, local rice processing, crop farming and grain-banking in the study area. The study also intends to investigate how micro credit has assisted women beneficiaries as compared to non-beneficiaries in the study area, as well as issues relating to loan repayments and interest rates among others.
Motivation for the Study
Microfinance is one of the major intervention area that is gaining way in major development projects in Ghana. Most institutions especially NGOs are operating with Microcredit scheme as one of the pillars for support project in their operational communities. Though there are several studies conducted on Microfinance and its benefits to the society, Ghana still have few literatures on the benefits. The study area is one of the Districts enjoying this enormous support from Microfinance institutions. The purpose for the study therefore is to contribute to the existing literature in the Country. The company where I work also runs a Microcredit scheme. The motivation therefore is to unravel the benefits accruing as a result of their operations which may serve as a bench mark for the District and other stakeholders.
I have the desire to become a professional in the field of Microfinance, where I will be able to organize advisory services to MFIs, organise training programs to partner organisations and individuals in the industry and contribute to the development and expansion of the Microfinance industry. The study will thus serve as a spring board to enhance my knowledge on the field of Microfinance and open avenues for me to understand the concepts much better.
The theoretical relevance of this research is to fill a gap in the literature about the economic and social benefit of Microfinance to women. The study shall bring to bare some issues relating to microcredit loans and repayments by clients in the study area, paying particular attention to income generating activities run by the beneficiaries. The study attempts to address dearth of issues relating to microfinance in the study area and Ghana in general. The study shall also provide additional literature on Economic and Social Benefits of Microfinance which will contribute to learning by students and researchers.
The study shall benefit the microfinance industry in Ghana and the world as a whole. The study shall also serve as a bench mark for some of the MFIs about the impact they are making to beneficiaries and society in general. Practically, the study shall serve as a reference to NGOs and FNGOs operating Microcredit schemes. Other stakeholders like the District Assemblies shall also use it as a reference material especially in the study area. Finally, the study shall also indicate whether microcredit loans improve the lives of beneficiaries as compared to non-beneficiaries.
Another factor motivating the researcher is the fact that the study will reveal to stakeholders about the benefits accruing to the society as a result of Microcredit schemes in the District. Most women in the district operating small businesses have had challenges accessing loans from banks as a result of demands for collateral. The study will therefore unearth some of the barriers the women have been able to go through due to the implementation of Microcredit institutions by NGOs and other Agencies in the study area. The study will also serve as a guide to policy makers within the Microfinance industry in Ghana which will help improve their operations and support in widening the scope of the industry and general operations.
Major Research Objective
The main research objective of the study is to investigate the economic and social benefits that microcredit brings to women beneficiaries in the study area, paying particular attention to income and asset accumulation, access to health and education, self employment empowerment of women in decision making.
Examine the benefits of microcredit to women beneficiaries in terms of income, health, education, employment and empowerment as opposed to non-beneficiaries in the study area.
To investigate beneficiaries' perception about the MFIs services.
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To investigate whether the clients invest the loans in the appropriate business activities.
To investigate whether the clients face some challenges in accessing loans and repayment.
Major Research Question
The main research question for the study is: What benefits has microfinance on women beneficiaries as compared to non beneficiaries?
Minor Research Questions
Do the MF loans impact on household income and savings of clients?
Are there any improvements in accessing health, education self employment and empowerment?
What are the women beneficiaries' perceptions about micro credit facilities given them?
Do the clients invest the loans taken in the appropriate business activities?
What are some of the challenges faced by clients in loan access and repayment?
Description of the Study Area
(SND) is one of the largest Districts in the Northern Region of Ghana. It is one of the 18 administrative district of the Northern Region established under the PNDC Law 207 by the legislative instrument of 1988. The district was carved out of the Western Dagomba District Council, made up of Tamale, Tolon Kumbungu and Savelugu respectively. It has a total land mark of 1,790.7 square kilometres. The District is situated along the Tamale Bolgatanga High Way, with Savelugu Township as the District capital. It share's boundaries with the West Mamprusi District in the North, Tolon/Kumbungu District in the West, Karaga District in the East and Tamale, the Regional capital in the south. The distance between the district and the Regional capital is 12kilometers, (Ghana Districts website).
The district is predominantly a farming community with the majority of the population in the rural settlement. The District is made up of 149 communities with One Urban/Town Council, Savelugu as the capital and five area councils namely Pont-Tamale, Diari, Tampion, Moglaa and Nanton. Out of the 149 communities in the district, 143 are rural dwellers represent 80% of the total population in the rural areas and the remaining 20% in the urban towns. In the year 2000, the District had a population of 91,415 per the 2000 nationwide census. Currently the District has a population of 139,283 representing 5.6% of the total population of the Northern Region and 0.56% of the total population of the whole Country, (Ghana Statistical Services 2010 Annual report). Between 2000 and 2010, the population has increased by 47,868, representing 52.36% within 10years. Out of this population, 71,752 are females, representing 51.52% of the total population of the District, and the remaining 48.48% represent the population of males. The inhabitants of the District are predominantly Dagombas and Savelugu is one of the traditional seats of the Dagbon Kingdom.
The people in the area are predominantly farmers who engage in various types of crop farming activities. The major economic activities in the District include the following:
Agriculture basically at the small scale which includes corn, guinea corn, millet, rice farming, soya beans, yams, cassava plantations and others.
Selling and buying of foodstuff. Some of which includes yams, corn, millet and all manner of grains.
Sand winning for major construction works in Tamale Metropolis.
Fishing along the black Volta
Sheanut harvesting and processing into sheabutter.
Others also engage in activities such as animal rearing, bee hiving and general business trading. The women in the District also engage in activities such as petty trading, Sheanut harvesting, rice processing, groundnut oil extraction and other menial jobs in providing assistance for the family. Some time back the District was also infected with a devastating guinea worm disease which led a lot of people incapacitated leading to high rate of poverty.
The District has a big market in the Savelugu Township which attracts all manner of traders within the Northern Region. The market days falls every six days with major traders from Tamale, the Regional Capital and other Districts including Tolon/Kumbungu, Karaga, Walewale and Yendi districts and as far as Bolgatanga. The District Hospital is situated in Savelugu Township with other health Centers in Zogu and Tampion respectively.
The District has attracted major donor partners as a result of the level of poverty. Available evidence indicates that the District has 20 Donor Partners. Notable among them are: World Vision International Ghana, UNICEF, CCFC/TUMAKVI, School for Life, Catholic Relief Services, Ghana Danish Community Project, Rains/Camfed, European union/GOG, NORPREP/IFAD and a host of others. Out of which four institutions operate Microfinance schemes including World Vision, Tuma Kavi/CCFC, European Union/GOG, and GDCP. The district currently has two financial institutions, namely Borimanga Rural Bank and Ghana Agricultural Development Bank, which are situated within Savelugu Township. These banks also run micro credit schemes yet with high interest charges as compared to credit schemes run by NGOs, therefore making it difficult for borrowing by the local dwellers and farmers, (Ghana Districts Website).
Organisation of the Study
This chapter shall include Introduction, Problem Statement, Motivation for the Study, Research Objectives, Research Questions, Significance of the Study, Operational Definitions.
The chapter two shall comprise mainly reviewing available literature on Microcredit, theories and empirical studies.
Chapter Three shall deal with the research methodology, comprising the Background of the study area, research design, population, Sample Size, research instruments, data collection procedure and analysis Validity of Instruments.
Research Findings And Discussion
Chapter four shall comprise of analysing and interpreting data which will be gathered through the use of the above techniques mentioned in chapter three.
Chapter 5 Summary, Conclusions, Recommendations
Finally, Chapter five shall cover all key findings, conclusions and recommendations.
Shea Butter Processing
Sheabutter is oil extracted from Shea nuts. The Shea nuts are seeds of tropical African Shea tree which grows wild and has fatty nuts which yield Shea butter. Some call it the poverty-coping tree. These trees are very common in the Northern part of the Country especially rural areas. Harvesting and processing Shea butter is a long labour intensive activity. The process brings women in the community together which in itself foster solidarity among participants. The Shea butter is used as cooking oil and body lotion. Shea butter is also known for its richness in Vitamins.
Local Rice Processing
Local Rice Processing is a process by which women groups purchase local rice and process it manually by boiling the raw rice, which is dried and husked to ensure that the seeds are removed properly and sold to generate income.
Grain banking is a process by which women entrepreneurs in the rural areas invest loans taking from MFIs into grains and other cereal crops by purchasing large quantities during harvesting at low prices, and keeps them for price hikes to be able to sell and make some earnings. Mostly some the produce purchase includes maize, millets, local rice, soya beans, sheanuts, groundnuts and more. Others also purchase the crops at low prices in the Northern sector and transport them to the Southern sector of the Country to resell at moderate prices.
Crop Farming is a process by which farmers cultivate plants to yield food, feed or fibre. This is a process which is locally done by the use of traditional tools by farmers. Some of the tools used are mainly traditional hoes and cutlasses.
Microfinance is defined as financial services that are given to low income clients through Microfinance Institutions. It is a movement that ensures that a world of low income households have a permanent accessed to financial services to finance income generating activities, accumulation of assets, food security at home and risk protection.
Microcredit is defined as very small loans given to poor clients mostly without collateral security to enable them raise income to sustain the household. These loans are normally provided by legally registered institutions worldwide.