The contribution of Micro Finance Insitutions, particularly NGO’s in Ghana is worth mentioning.  However, in recent times many individuals and groups have questioned whether any impact has been made after all.  In my view impact is being made to many poor people which has contributed to the development of the rural poor. What is lacking is patience and time since impact is worth measuring over a period of time.

I invite comments and contributions from great leaders like you to improve the impact my organisation is making to the development of Africa.

Cynthia Iremeh Naaso
Ghana

Many research studies have showed that Micro Finance plays a vital role towards poverty reduction in many countries. It is in this light that a number of commercial banks have established departments to deal with Small and Medium Enterprises (SMEs). Women and Youth in particular have been the main target group since studies conducted have shown the prevalance of poverty and the worst living conditions among the people is on young people and women.

To have an impact from these microcredits there should be established systems to facilitate the receivers of these loans and create a conducive environment for their businesses grow. Among the big challenges have been higher interest rates on these loans. Not only that, but also majority of people who receive these credits lack enterpreneurial skills since they just undergo a crash training in order to get the loans and the banks put more attention on insisting the returns of the loans rather than how people can use best the loans and establish businesses which are sustainable.

Another challenge I see is that we Africans more often think little of becoming big in business! We easily get satisfied running a business worth less than $100 and don’t dare to try expanding to thousands and millions of dollars businesses.
however, I appreciate the efforts you put to fight poverty in our continent and I suggest that you encourage people you are dealing with to learn new ways of doing business however small it may be and always seeking new opportunities of expansion.

There is a global consensus that micro-credit to the rural poor, and women in particular is important for both economic and social development. We cannot dispute the fact that there has significant improvements in the quality of lives of the beneficiaries.

My concern is that enterprises owned by the poor, particularly women, rarely seem to rise above the subsistence level. I am curious to know if from your experience you have made similar observations and what may be some of the factors contributing to this? My friends and I recently had some discussions on this and we left with one question ‘is all the credit pumped into the enterprises or is some of it used for other commitments such as family consumption???

From a Gender perspective, there have also been concerns on whether women have full control of the loans received and their earnings? This is more so in cases where credit is specifically meant for women and women’s groups.

What is the experience in other parts of Africa?

Thanks to you all who have contributed to this discussion.  I am grateful for your insights.

From my experience, the issue of high interest rate has been debated over and over again.  Some proposers argue that the operational or administrative cost associated with the provision of micro credit is very high and for that matter the need to charge an interest rate to meet the cost of bringing this assistant to the rural poor.

From the donors perspective the issue is on sustainability.  It is becoming clear that most donors want to fund projects that can run on its own with three to five years.  So they encourage organisations to run their activities in a manner that will let them grow their initial capital to enable be sustainable.

In Ghana, I have not come across a fixed interest rate charged by all the microfinance institutions.  There is no law to that effect as they are not regulated by the Bank of Ghana.  However some institutions charge very low interest whiles others charge high rate.  What we look for here is if the low interest rate is able to make you sustainable why not.  If the is the other way why not.

But the issue of the poor been capable of paying back the loan is critical here.  Some people prefer the high rate because it goes with more flexible repayment schedule and we have what we call the credit with education system . Beneficiaries are educated on how the increase their many and even save.

the unfornate thing about the female beneficiary is that, she most often have to attend to the need of the home and for that is unable to increase the revenue.  However it may interest you to know that, most microfinance institutions prefer to support the female to increase their income because they are most vonuerable and also because they are more competent in making profitable use of the money as compared to the male.

All this not withstanding, I think there is more benefit to the provisionof micro credit to the developement of the rural poor than just ignoring it.

Am available for more suggestions and discussions.

Be the leader you are made to be.

With love Cynthia
Ghana