Impact Of Microfinance On Livelihood Diversification Of Women Agro- Processors In The Northern Region Of Ghana

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Date

2020-10

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University of Ghana

Abstract

The dominant agro-processing activities in the Northern Region include shea butter and rice processing. Despite the extension of microfinance services to women agro-processors (shea butter and rice processors) by Governmental and some non-governmental microfinance institutions and banks in the region, agro-processors have still not been able to improve upon their performance in terms of output and income. This poor performance does not only limit the growth of agro-processing enterprises but also, it limits poverty reduction efforts/ activities in the area. This study, therefore, assessed the impact of microfinance on livelihoods diversification of women agro-processors using 402 agro-processing enterprise owners. The study was undertaken in fifteen (15) communities drawn from the Tamale Metropolis and the Kumbungu District of the Northern Region of Ghana. A cross-sectional survey design was used with the collection of both quantitative and qualitative data. The methodology used was the treatment and control approach which involved the use of techniques such as interviews, focus group discussions and observations. Descriptive and inferential statistics such as frequencies, pie charts, histograms, Ordinary Least Squares (OLS) Linear regression model, Probit regression analysis, Analysis of variance, t-test and Chi-Square analysis supported by qualitative narratives were employed in analysing the study’s data. Results of the study revealed that socio-cultural and socio-economic characteristics of women agro-processors had a significant influence on women agro agro-processors’ participation in microfinance programmes. Additionally, education, household size, labour, credit, number of loans taken, and training were positively related to the output of shea butter and rice processors. The study further found out that, majority (69.4%) of women agro-processors enterprises had experienced some level of growth because of their participation in MF programmes. However, there was no significant difference in agro-processors participation in MF programmes and the number of people employed (labour) between the various levels of participation in MF programmes. Results of a t-test found a significant difference in average monthly household expenditure on food, clothing, health, education and social activities between participants and non-participants of MF programmes. Also, the majority (58%) of women agro-processors surveyed had diversified their livelihoods activities. Participants of MF programmes were more likely to engage in diversified livelihoods as compared to non-participants. Similarly, results of a Probit regression analysis found that with Pseudo R2 = 0.7228, the Probit regression was found to be significant with 72% of the variation in livelihood diversification being jointly explained by the variation in the selected independent variables. The study also revealed that collateral lending, savings demand, high-interest rate, small loan sizes, and unfavourable repayment terms are the challenges agro-processors encounter when accessing MF products particularly microcredit from MFIs. It is therefore recommended that; the central bank should reduce interest charged on loans given to MFIs to enable them to subsidise credit given to women agro-processing borrowers as advocated by the welfarist approach. This would enhance agro-processors’ microenterprise development and poverty reduction in the studied communities and Ghana as a whole.

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PhD. Agricultural Extension

Keywords

regression analysis, agro-processing, Ghana, variance, Livelihood Diversification

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