by Bharathi Ram - Africa -

MICROCAPITAL STORY: Government of Ghana to Investigate Disbursement of Microfinance Loans to Rural Women in the Country

The Ministry of Women and Children’s Affairs in Ghana will be launching an investigation into the mode of fund distribution followed by Micro-finance and Small Loans Centre (MASLOC), the country’s microfinance scheme introduced by the Government of Ghana under the administration of its former President, John Kofi Agyekum Kufuor. According to a press release on the Ghanaian news portal myjoyonline.com, the Ghanaian Ministry believes proper procedures and guidelines have not been followed in the disbursement of funds to rural women in the region and hence the need for an investigation on the mode of distribution. Speaking on the issue, Ms. Akua Sena Dansua, the Minister of Women’s and Children’s Affairs, stated that women in the Eastern Region of Ghana were yet to gain access to the funds released under the government scheme nearly six years back. Elaborating on the breach of guidelines for disbursement of the funds, the Minister also alleged that women who were ‘not supposed to benefit from the scheme’ were granted loans while the women who were in true need of the funds were not provided any. The Minister contends that this ‘lack of diligence’ in the disbursement of funds has also resulted in a high default rate. No information on the current default rate is publicly available. Additionally, no further information on the investigation is also available.

The Micro-finance and Small Loans Centre (MASLOC) was introduced in 2004 under former President Kufuor’s administration. MASLOC was created as part of the Ghana Poverty Reduction Strategy, a policy agenda for poverty reduction and economic growth laid out by the Ghanaian government and the World Bank. The scheme was launched to administer, coordinate and monitor microcredit schemes in the country and to make sustainable financial services available to all individuals, co-operatives and other groups in grassroots communities in Ghana. The prime focus was to help the poor generate wealth, save and expand their mini-enterprises thereby leading to urban and rural poverty reduction. In September 2006, President John Agyekum Kufuor launched nine new regional offices and simultaneously directed USD 50 million towards the establishment of a Micro Credit Fund to provide capital to Ghana’s microfinance initiatives. As per a statement issued by Ghana’s Ministry of Finance and Economic Planning, women are given ‘priority’ under MASLOC’s policy. A 2006 estimate states that about 279,000 women in Ghana had benefited from the government’s microfinance scheme since its launch in 2004. Although no information is available on the current recovery rate of the scheme, the overall loan recovery rate was about 60 percent in the year 2006, as per this press report on the Ghana news portal, The Statesman.

Ghanain women’s access to microfinance services has been an issue of concern over the past few years. According to a study funded by the Business Sector Advocacy Challenge Fund (BUSAC) in Ghana, rural women in Ghana continue to face barriers when it comes to accessing microfinance services. In this regard, a 2008 press release on the Ghanain Journal quotes the lead researcher on the study Dr. Irene S. Egyir as saying that although women were participating in productive sectors, their lack of access to microfinance made it difficult for them to play their roles effectively. The research indicated that though most financial institutions in Ghana had embraced the challenge of assisting micro businesses, females still continued to receive less access to such credits as compared to men.

Other past studies on women’s access to financial services in Ghana have also revealed that barriers exist for women seeking access to financial services. As reported in this MicroCapital story, a study by the International Fund for Agricultural Development (IFAD) in 2000 revealed that challenges that are unique to women accessing rural microfinance include not having the time to leave their household duties to travel to the bank, finding male staff intimidating, illiteracy and semi-literacy. Further, an un-dated study of the Sinapi Aba Trust (SAT), an Opportunity International microfinance institution (MFI), summarized in an article by the Global Development Research Centre (GDRC), suggests that a number of barriers exist for women in Ghana, including not being allowed to use their loans to buy needed business assets and restrictions on loan sizes which prevent clients from making lump sum investments.

By Bharathi Ram, Research Assistant

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