Operation of Credit Union Schemes as a Strategy for Meeting the Financial Expectations of the Marginalised: The Case of Ho Municipality Credit Unions in Ghana

Abstract

The operation of credit union schemes in developing countries plays a major role in providing financial support for the financially excluded in society. These schemes have become strategies for managing poverty and for meeting the financial expectations of the marginalised. The main objective of this study was to assess the role of credit schemes in meeting the expectations their clients and examine the challenges facing such Credit Unions and the efforts being made to improve the quality of life of members. The study analysed the financial benefits and facilities available to Credit Union members and assessed the impact the scheme was making on the lives of members. One hundred and twenty questionnaires were administered to selected members of four Credit Unions in the Ho Municipality.  An analysis of the data revealed that members of the Credit Unions faced certain financial challenges like school fees, medical expenses, funeral expenses and acquisition of means of transport.  It was also found out that Credit Union annual interest rates were a little higher than those charged by the banks. Nevertheless the scheme assisted members significantly in overcoming most of the financial challenges facing them. This helped in improving the quality of life of the members. Management Staff of the Credit Unions were found to lack the needed professional competence and expertise for managing the scheme.  The study recommends that interest rates of Credit Unions should be reduced and the competence of management staff of the scheme should be upgraded in risk and investment management to make the schemes more sustainable.

Keywords: Credit union schemes, financial challenges, poverty alleviation strategy, professional competence & financially marginalised.