ABSTRACT
The purpose of the research was
to find out how the microfinance activities of Akuapem Rural Bank have help to
reduce the poverty levels among poor households in its catchment areas. The
study was also to ascertain whether or not the activities of the microfinance
of the Bank has any positive impact on the living conditions of the beneficiaries
and the extent to which it has reached the unbanked population in the rural
areas.
In the research process, ten
(10) groups were selected of which seventy (70) respondents were chosen, seven
(7) from each group. All the selected groups and respondents were done through
simple random sampling. The Bank also provided information needed on the
beneficiaries who patronized the microfinance activities from 2010-2015. All
these information were put together and analyzed using Statistical Product and
Services Solution (SPSS) version 16. The SPSS was used to generate frequency
tables for the analysis. The data analyzed revealed that businesses of
beneficiaries and their livelihoods have improved as a result of the
microfinance scheme. Also, out of the seventy (70) respondents sampled, 37.1
per cent were new members who never had any banking experience before. This
means that the microfinance had been able to reach out to some unbanked
population in the rural areas.
It is therefore recommended
that men must be included in the various groups to help alleviate the level of
poverty faster in the rural areas. Also, the bank must expand the activities of
the microfinance to cover more qualified people in the rural areas.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Poverty is unrelenting and implacable enemy with a collection
of weapon of child death, starvation, disease, illiteracy, violence, child
trafficking just to mention a few. It furthermore can been as a circumstances
where some group with similar characteristics continuously undergo deprivation
with respect to fundamental necessities such as shelter, food, healthcare,
education, access to communication tools , clothing among others. Moreover,
others describe poverty as people or families with earnings under a certain
threshold level regardless of their standards of living. This definition
comprises low level of earnings, inaccessible healthcare facility, poor
hygienic condition, lack of portable drinking water, high level of illiteracy
rate, poor security and protection from preventable crime among others. (Nii K.
2002).
Poverty is a world phenomenon even though is more endemic in
developing countries than the developed world. Records have it that
seventy-five per cent of the world‟s poorest countries are located in Africa.
In the last 30 years, extreme poverty incidence globally has decreased (from
40% to below 20%) but has little effect in African countries. Currently, in
sub-Sahara Africa, more than 40% of people live in extreme poverty
(our-africa.org)
In the case of Ghana, even though successive governments‟ implementation
of policies had led to general decline in the poverty incidence in the country,
poverty is still a force to reckon with in the deprived rural communities. It
is unarguable that more than half of the nation‟s population lives in rural
areas. Currently, poverty in the rural areas has become a great concern in the
country making the poor people and their various deprived regions to live in
absolute low standard of living environments. Records have it that, the poorest
areas in the country are the three northern regions where individuals encounter
chronic food insecurity and high level of illiteracy among
the host of others. However, there are pockets of poor and extremely poor
people in every region in Ghana.
The poverty situation in Ghana is cyclical one that the
Government and other development partners have developed various policy
interventions to help reduce it. Some of the intervention strategies adopted by
government include; the National Youth Employment Program (NYEP), Livelihood
Empowerment Against Poverty (LEAP), National Health Insurance Scheme (NHIS) and
Microfinance and Small Loans Scheme (MASLOC) among others.
The NYEP was created in 2006 to help reduce the increasing
level of youth unemployment with the desire to empowering Ghanaian youth so
they could add positively to the socio-economic and sustainable development of
the nation. This initiative had spread to rural areas where they employed the
youth in the rural communities into one of the modules in the programme called
youth in agriculture. This generated a source of livelihood for the rural
folk‟s hence reduced extreme poverty among them.
LEAP is a government social cash grant programme which
provides cash and health protection to extremely disadvantaged individuals or
households across Ghana with at least one of three demographic categories;
households with orphan or vulnerable child (OVC), elderly disadvantaged and
person with extreme disability who are weak to involve themselves in any
economic activities. The main objective behind this programme is to help
eliminate extreme poverty among poor households in the country more especially
in the rural communities. It is believed that the beneficiaries of this
intervention are poorer than the country‟s rural average with a daily per
capita expenditure grossly 85 US cent.
The MASLOC is a microfinance apex body responsible for
implementing the government of Ghana microfinance programmes targeted at
reducing poverty, creating jobs and wealth.
MASLOC does not only disburse micro
and small loans to its clients but further provides business advisory services,
preparation and capacity building for small and medium scale enterprises
(SMEs).
The above policy interventions are premised on the ideology
that poverty is extreme in rural communities in Ghana and the fact that the
poor lack the ability to escape from extreme poverty themselves. The objective
of these interventions is to eliminate extreme poverty and not to eradicate poverty
in its entirety. It is therefore clear from global perspective that poverty
reduction needed direct financial interventions in the rural communities.
Microfinance has been accepted by all stakeholders including
governments, foundations, community development groups, non-governmental
organizations and even for profit private firms because of its efficacy to
helping reduce the level of extreme poverty among the poor in the rural
communities.
The idea of microfinance has been in the system for several
centuries. During those periods, a lot of savings and credit groups that have
operated for centuries include the "susus" of Ghana, "chit
funds" in India, "tandas" in Mexico, "arisan" in
Indonesia, "cheetu" just to mention few as well as numerous savings clubs and burial societies found
all over the world („The New Vision of Microfinance,2004) . According to the
New Vision of Microfinance 2004, available proof points to the fact that, one
of the first microcredits in Africa was established in Northern Ghana in 1955
by some Canadian Catholic Missionaries. Susu, which is we commonly associate with microfinance is believed to have come
from Nigeria and now a household name in our society spread (The New Vision of
Microfinance 2004).
Schreiner and Colombet (2001), microfinance is the attempt to
help the poor and the vulnerable gain access to small credit as well as get the
opportunity to make deposit or save which they were denied by the
traditional banks. Therefore, microfinance involves not only the provision of
financial services such as savings, loans but also insurance to poor people
living in both urban and rural communities who are denied financial services
from the formal financial sector. The providers of microfinance services
include Rural Banks, Savings and Loans Companies, Credit Unions, Susu Companies
among others.
It also involves lending to clients who do not have required
collateral, recognized business accounts or a reputable credit history.
Individual collateral is substituted for by group collateral. This makes it
possible for people in the catchment areas of Akuapem Rural Bank to access
microfinance services provided by the bank.
1.2 Poverty and Vulnerability
incidence in Akuapem North Municipality
Vulnerability in this
scope is explained
as the diminished
capacity of an individual or group to forestall, handle,
fight and recover
from the impact of a
natural or man-made hazard in relation to physical, economic, social, political, religious
and health issues. The 2010 population and housing census disclosed some level
of vulnerability in Akuapem North Municipality.
The fact remains that people react differently to risk as a
result of the kind of association or group, gender, ethnic background, age,
socialization process among others but almost all the people in the
municipality are Ghanaian by birth (91.5%) with total migrant population
representing 8.5% of the total population which is 136,483. Measures and
structures to reduce the impact of
vulnerability such as mitigation, preparedness,
prediction, guiding capacities, local government and
traditional structures exist in
the municipality to tackle the root
cause of vulnerability. Most
vulnerable groups include
persons with disability, the aged, children, pregnant and nursing mothers among others.
Poverty like other phenomenon has
varying perception and understanding from different people due to its diverse
nature and background. Some indicators used in measuring poverty in the
municipality include but not limited to epidemics in communities, high rate of
social vices, poor sanitation, poor housing conditions or dilapidated houses,
unemployment, lack of social amenities among others. Some of the common causes
of poverty in the municipality are; poor management of scarce resources, large
family size, lack of skills training, low level of education (Akuapem N, 2015).
The predominant occupation in the municipality is farming. 50.7 per cent of the
population in the municipality is below the poverty line. This means that five
(5) out of ten (10) people in the municipality are poor which is slightly
higher than the regional figure where three (3) out of ten (10) people are
poor, Ghana Population Census (2010).
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