The Influence of Microfinance Services on Firm Performance of Microbusinesses in the WA Municipality

Abstract

The study sought to examine the influence of microfinance services on firm performance of microbusinesses in the Wa Municipality. Microfinance services are the financial and non-financial services offered by Microfinance Institutions (MFIs) and other lending institutions to the poor and low-income earners including microcredit (m-credit), micro insurance (m-insurance), micro-savings (m-savings), and capacity building and business support (skills development) services. The study adopted the causal hypothesis-testing research design using both qualitative and quantitative research approaches. The study used a sample size of 50 microbusinesses across various sectors including food, manufacturing, trading and garments. The principle instrument for data collection was a semi-structured survey questionnaire. Data collected from participants were analyzed with the aid of Microsoft Excel 2016 and Python 3.7.3 and presented with the aid of figures and tables. The study found that microfinance services had a strong and positive influence on firm performance of microbusinesses. The study also found that capacity building and business support services had the most influence on firm performance of microbusinesses, followed by microcredit services, m-savings services and then m-insurance services. The study concluded that microfinance services had a strong and positive influence on firm performance of microbusinesses in the Wa Municipality. Based on the findings, the study recommended among other things that microbusinesses that pursue capital adequacy, growth, and efficiency in operations should endeavor to access and utilize first of all, capacity building and business support services provided by MFIs and other relevant lending institutions. The study also recommended that MFIs should pursue continuous improvement of their services and create an environment of trust so that microbusinesses will be motivated to patronize them.