TITLE:
The Impact of Microfinance on Grassroot Development: Evidence from Smes in Kwabre East District of Ashanti Region of Ghana
AUTHORS:
Edward Yeboah
KEYWORDS:
Grassroots, Grassroots Development, Grassroots Development Framework, Microfinance, SMEs
JOURNAL NAME:
Open Journal of Business and Management,
Vol.5 No.4,
August
21,
2017
ABSTRACT: Empirical studies attest to the assertion that development interventions aimed
at people at the grassroots are poverty alleviation oriented. Microfinance has
been acclaimed to be effective vehicle for poverty eradication. Since poverty
alleviation is rooted in grassroots development, the impact of microfinance on
grassroots development cannot be gainsaid. Equally relevant in this regard is
the pivotal role of the SME subsector in grassroots development. This is
against the backdrop that at the grass root, the active poor are those who run
enterprises known as micro, small and medium enterprises. This research
looked at the impact of microfinance on grassroots development using SMEs
in Kwabre East District of Ashanti Region in Ghana as the case study. Both
theoretical and empirical literatures were reviewed. The study adopted the
descriptive type of research and the survey method to collect data from 82
respondents. The survey was done through the administration of structured
questionnaires. The sampling techniques used included the non-probability
methods of purposive and convenience. Qualitative and quantitative techniques
were utilized in the data analysis. The research used the development
evaluation framework for impact assessment of projects pioneered by the Inter-
American Foundation. It was evidenced that microfinance as a development
intervention has some level of impact on grassroots development. The
impact is of direct benefits to individual operators of SMEs and their families.
These included positive impact on basic needs; knowledge and skills; employment
and income; and assets. Other positive effects of microfinance on
SMEs relative to grassroots development were self-esteem, creativity and critical
reflection. However, findings from the survey are not explicit on the impact
of microfinance on strengthening organizations and broader impact on
society in relation to local, regional and national as demanded by the Gras-sroots Development Framework (GDF) of Inter-American Foundation for
measurement of impact of development interventions. The researcher therefore
recommends for further studies the effect of microfinance on organizations
and society in the areas of organizational capacity and culture, policy
environment and community norms. It was also revealed that microcredit
remained the dominant feature of microfinance in making significant impact.
The hurdle of accessibility to credit by SMEs has not been completely cleared.
Over 60% of the respondents posited that microfinance has not increased
their business capital and stock levels. The researcher makes far-reaching
recommendations for accessibility to credit by SMEs and the strengthening of
Microfinance Institutions to enable them resilient in financial intermediation
and provision of non-financial services.