Fighting poverty with micro-credit. Experiences from Micro-Finance and small-loan center (MASLOC) in Savelugu/Nanton District of Northern Ghana

Abstract

The concept of government getting herself directly involved in direct disbursement of microfinance is a novelty in Ghana. In 2006, the Government of Ghana established the MASLOC with seed money of fifty million United State dollars, directly under the Office of the President with following objective: To undertake sound and judicious administration, on fiduciary basis, of government and/or development partner funds for micro and small scale credit programmes. The rationale behind this bold government initiate is to make microfinance accessible to people in the micro and small enterprises who are found in the informal sector dominated by women, the poor and marginalized. This study examined micro-credit as a poverty reduction tool using the experiences of MASLOC scheme in the Savelugu/Nanton district in the northern region of Ghana. The study through the use of open ended questions based on key informant interviews discovered that most clients of MASLOC scheme were satisfied with the scheme. The study found out that there are marked improvement in household economic variables such as increased level of incomes, saving, expenditures on consumption and acquisition of assets. MASLOC have also organized financial training for their clients on financial management. The study reveals that female clients pay back their loan more their male counterparts. Despite the enhanced and visible improvements in the lives of clients, there were some operational problems with the MASLOC scheme: political interference, inadequate credit to clients, and lack of education among others. In the light of this, the study made the following recommendations towards improvement of the MASLOC scheme: MASLOC scheme, which is directly under the Office of the President, should be separated in order not to give the scheme political tag, the establishment of a complete audit department at MASLOC, extension of the scheme more rural communities to reach the poor people.