The Impact of Microfinance on Maize Farmers in Nkoranza (Brong Ahafo Region of Ghana)

This study examines the effectiveness of microfinance as a poverty reduction tool.

Advocates of microfinance argue that it is a powerful tool to alleviate poverty. Many recent studies, however, suggest that the reality of microfinance may be less attractive than its promise. The study examines the impact of microfinance on maize farmers in Nkoranza, Ghana. It conducts a survey of 100 participants of a microfinance program. Findings include:

• Impact of microfinance on social and economic wellbeing of borrowers is marginal;
• Recipients identified lack of entrepreneurial skills and market for their produce as causes for lack of impact.

The study infers that credit is only one of the many possible interventions to generate income and alleviate poverty. Microfinance cannot be a substitute for jobs or markets that are not available or accessible. The study highlights the need improve infrastructure and establish linkages between the farm and non-farm sectors of the rural economy. It also stresses the need to develop governance infrastructure and a comprehensive strategy that identifies the best option to reduce poverty.