James Atta Peprah

Access to Credit and Technical Efficiency of Vegetable Growers in Mfantsiman District of Ghana

The back bone of the Ghanaian economy is agriculture. The sector is the main source of staple food and vegetables. Even though most studies have investigated technical efficiency of some staple crops in Ghana, not much investigation has been carried out on technical efficiency of vegetables growers. The study estimates the technical efficiency of 100 vegetable (garden eggs, pepper and tomatoes) growers using the stochastic frontier function. Results indicate that mean technical efficiency is 0.748 with minimum and maximum values of 0.623and 0.897 respectively. The study revealed that 40.2% of farmers produce at efficiency level of 0.71-0.75. A good mix of inputs improves vegetable production but do not significantly determine yield. Access to credit by farmers is an important source of technical efficiency. Policy implications drawn from the results include a review of agricultural loan policies from the government banks, private banks and microfinance institutions (MFIs) to increase credit access to smallholder vegetable growers.

Cost implications of microfinance regulation: lessons from Ghana

ABSTRACT The paper examines the impact of the costs associated with regulation on Microfinance Institutions in Ghana. To achieve the paper objective, we use a unique set of field data from 25 Microfinance Institutions from different regions of Ghana and opinions gathered from the managers of the sampled MFIs. We find that regulation increases an array of doing business costs that MFIs tend to pass to their micro-clients by increasing the interest rates. Furthermore, we find that the costs of regulation have adverse effects on outreach: reduction in percent of female borrowers. These findings are corroborated by the comparison analysis we conducted on Ghanaian MFIs that report to the Mixmarket. Regulatory instruments need to be well designed to achieve their dual roles of providing sound financial services and protecting micro-clients without jeopardizing the outreach mission of the MFIs.

Loan refusal, household income and savings in Ghana: a dominance analysis approach

Loan refusal has been a problem facing many loan applicants at the household level and this problem is not new to loan applicants in Ghana. Despite this knowledge, researchers passively discuss loan refusal and do not consider the intensity of this problem. This study analyses the effect of household income and savings on loan refusal and the intensity of loan refusal in Ghana using the fifth round of the Ghana Living Standards Survey (GLSS-5). The study employs the direct elicitation approach to identifying credit constrained (loan refused) households and makes use of the Logit and Poisson regression to regress the loan refusal variable on other covariates. The Logit model is applied to loan refusal as a binary variable (refused and not refused) while the Poisson is applied to loan refusal as a count variable (number of times of loan refusal). The econometric analysis of 1,600 and 1,591 households for the loan refusal and intensity of loan refusal respectively shows that income and savings inversely relate to loan refusal and the intensity of loan refusal at their respective significance levels. It is also shown that low-income and low-savings households are more likely to be discouraged from loan applications than their counterparts in high-income and savings households. Financial institutions are called upon to generally widen their coverage and to extend their activities more into the rural areas so as to increase the stock of loanable funds available to rural dwellers. This will reduce the vulnerability of rural dwellers when it comes to loan refusal.

Microfinance in Ghana: An Exploratory Case Study

This article presents the findings from a 5-week exploratory research project on micro-finance in Ghana. The aim of this project was to develop initial hypotheses that can be tested in a follow-up systematic research project. Our preliminary findings are that informality is a major roadblock to successful lending; that lenders redirect loans to other, non-explicit needs and wants thus indicating a different set of priorities than the lenders; and that the most successful component of microfinance is not lending, but saving. We also found that gender and religion constitute important factors interfering with and potentially distorting successful microfinance practices.

Addiction to Microcredit: An Obstacle to Social and Financial Mobility

Contrary to the confidence in the ability of microfinance to uplift the poor on the social structure so that upon reaching a higher echelon, the poor (clients) will be able to save and borrow from formal financial institutions (FFIs), most of the poor and socially vulnerable have now become addicted to micro-credit due to demand and supply-side factors. What could be the possible causes of this micro-credit addiction? The objective of this paper was to unravel the causes of what we call “microcredit addiction” and provide recommendations that will enable the addicted clients to break away from this craving. The paper reviews literature on social and financial impact of microfinance and finds that failure of microfinance in the delivery of its core mandate of poverty reduction results in clients’ addiction to micro-credit and, eventually, inhibits their social and financial mobility. The upscaling intentions of MFIs, compulsory savings, high interest rates and transactions costs, multiple borrowing, client’s inability to save for the future and, surprisingly, clients’ satisfaction with MFIs’ products and services are among the factors that make clients get addicted to micro-credit.

Microcredit, Child Education, and Health Outcomes: A Case Study from Ghana

As an alternative to traditional banking, microfinance has been proved as a tool for reducing poverty and enhancing the livelihoods of its beneficiaries. The key objective of providing microcredit to poor households and low-income groups in society is to enable them to engage in productive activities that will generate some income to cater for their households of which children constitute an important segment. We adopt the treatment effect model on a sample of 500 small business operators from two Districts in the Western and Central Regions of Ghana, to estimate the effect of parental borrowing of microcredit on education and health outcomes of children. Our result suggests that clients’ children are regular in school and healthier than those of non-clients. The study recommends that microfinance institutions should integrate child education and health products into the traditional microfinance programmes. These products should target low-income households to promote their human capital development needs.

Regulation, Outreach, and Sustainability of Microfinance Institutions in Sub-Saharan Africa: A Multilevel Analysis

The paper examines the effect of regulation on microfinance institutions’ (MFIs) sustainability and outreach in Sub‐Saharan Africa (SSA). Using unbalanced panel data from 2002 to 2012 for 30 countries and a multilevel estimation technique, we find that regulation helps improves the sustainability and breadth of outreach but not the depth. We also find that MFIs that accept deposits have better sustainability but tend to serve the marginal poor. Finally, regulatory quality has a positive impact on outreach and sustainability. Overall, the paper casts new light on the contribution of regulation to the dual objectives of microfinance.

Demand for Insurance in Ghana: Do Poverty, Employment Status and Demographic Characteristics Matter?

The paper answers the question of whether poverty, employment status and demographic characteristics matter in the demand for insurance in Ghana. Using binary logit estimation on the GLSS6 data, we found that the poor have a lower probability of demand for insurance, with locational influence being more pronounced for the poor in the rural areas, while formal salaried workers have higher demand for insurance than self-employed. Again, residents in small cities and rural areas purchase more insurance than metropolitan residents and also, the influence of employment status is more of a rural phenomenon than an urban one. Demand for insurance differ depending on poverty and employment status. Policy must focus on segregating the insurance market to cater for different classes of people.