The Analysis of the Evolution of Microfinance Institutions in Ghana

B.Sc. Gloria Kena-Amoah

Master's thesis

Abstract:

Microfinance is termed as the provision of financial service to low income clients such as microloans through a variety of products and a system of intermediary functions. Microfinance has been over the past years gained grounds as a potential tool for poverty reduction and a driver of accelerated growth and development of many developing countries. Ghana as a developing country has witness the rapid growth of microfinance industry in recent years. The study therefore sought to find out the factors that influence the growth of microfinance institutions in Ghana. Despite the involvement of the low income earners and the very poor in MFIs, these organizations continue to thrive despite the challenges that they surround them. It further investigated factors that could be viewed as drivers and those that are considered as obstacles to the growth of the microfinance industry in Ghana.The study involved the use of both quantitative and qualitative approach with descriptive design. The study targeted 70 microfinance institutions operating in the Greater Accra region of Ghana. Questionnaire administration was the medium of obtaining data for the research which consisted of both structured and unstructured types of questions. Empirically, the study made use of the t- test to statistically measure the relationship between the outreach potential of MFIs as measured in terms of growth and the drivers and obstacles of growth of the microfinance industry in Ghana.Results obtained from the study showed that, the introduction of innovative products, access to international financial sources, provision of quality customer care and cliental base were identified as possible drivers of growth of MFIs in Ghana. More so, High rate of default, poor management, high operational cost and inadequate capital were found as possible obstacles that hinders the growth of MFIs in Ghana. Contrary to this, there was no significant relationship between the factors identified as drivers of growth and the outreach potential of MFIs in Ghana. The study however found a significant relationship between default rate and the outreach potential of MFIs in Ghana. Poor management, high cost of operation and inadequate capital did not significantly affect the outreach potential of MFIs in Ghana. Based on the results obtained, the study recommends the in cooperation of the MFI industry into the financial system to enhance better regulation and monitoring of the sector.

Keywords

Evolution, Microfinance, Institutions, Growth, Ghana

Language used: English

Date on which the thesis was submitted / produced: 22. 4. 2016

Thesis defence

• Supervisor: Dipl.-Kfm. Tomáš Hes, Ph.D.

Czech University of Life Sciences Prague

Faculty of Tropical AgriSciences

Master programme / field:
Tropical Agriculture / International Development and Agricultural Economics