Assessing the Impact of Microfinance and Small Loans Scheme (Masloc) as a Poverty Reduction Strategy in the Sunyani Municipality

Abstract

The study assesses the effects of MASLOC as poverty reduction strategy in the Sunyani Municipality. A case study design was adopted with a descriptive survey as the main study design and approach. Structured questionnaire was employed as the main data collection instruments to collect primary data from 112 MASLOC beneficiaries in the Sunyani Municipality of the Bono East Region. Both purposive and simple random sampling techniques were used to select the sample size. The study outcome shows that the level of poverty among beneficiaries before becoming MASLOC beneficiaries in the Sunyani Municipality was high and could hardly afford basic needs of life. However, after experiencing MASLOC, their status improve and could afford basic needs such as medical bills, school fees and other educational needs and even start and expand businesses and improve product and customer services. Again, the study discovered challenges to the MASLOC beneficiaries: high interest rate on loans, lack of collateral security to secure loans, stringent credit conditions, administrative costs associated with processing loans, biasness of MASLOC staff, among others. Finally, significant positive effects on improving the living standards of beneficiaries were concluded. The study recommended management of MASLOC to collaboratively work with the National Commission for Civic Education and other media organizations to develop and implement an advocacy and sensitization programme. Also, a good system that makes it very easy and fair for poor people to access credit from the scheme should be created. The Government of Ghana (GoG) should implement policies that make it favourable for poor people to access credit facilities from MASLOC and other Financial Institutions that grant credit to poor people.

Keywords: Microfinance, Small Loans Scheme, Poverty, Poverty Reduction, Small Business

DOI: 10.7176/JESD/13-2-04

Publication date: January 31^st 2022