Factors Influencing Loan Repayment Among Small Scale Women Fish Processors in the Tema Metropolis

Abstract

The focus of many microfinance institutions (MFIs) as well as African governments and other development partners now is to increase the productivity of the agricultural sector by improving the condition of women. One way of doing this has been provision of microfinance services. Evidence suggests that the credit given to women have achieved high loan repayment rates and high yield value in terms of welfare benefits. Despite these potential, women fish processors within the Tema Metropolis have high loan default rates. The high default by these women fish processors is, thus, in contradiction with the dominant evidence in the literature which argues that targeting women usually ensure better loan repayment rates and efficiency in implementation of microfinance services. Fish processing is a livelihood activity for women in the Tema Metropolis. A gap in knowledge exists in explaining whether the characteristics of MFIs and the suitability of their product are related to loan repayment, or whether it is socio-economic characteristics of the women borrowers, and their enterprises which affect loan repayment. The study was set out to determine the extent to which these different factors are related to poor loan repayment by women fish processors in the Tema Metropolis, of Ghana. The method used involved collection of cross sectional survey data from three MFIs and one hundred and fifty two women fish processors who operate within the Metropolis. The data collected were analyzed using various statistical tools such as frequencies, percentages, chi square, student t-test and regression analysis. The results of the study show that loan repayment rates are higher amongst clients of formal MFIs than for clients of semi-formal MFIs and could be related to product attributes. The study results also show that some socio-economic characteristics of the processors such as level of education, attributes of the fish processing enterprise such as size, number of people engaged and the enterprises’ performance affect loan repayment significantly. It is concluded that interventions aimed at improving the characteristics of MFI products and the performance of the enterprises will improve loan repayment amongst women fish processing entrepreneurs in the Tema Metropolis.