Microfinance and Rural Household Development: A Ghanaian perspective

Publisher:
Sage
Publication Type:
Journal Article
Citation:
Journal of Developing Societies, 2009, 25 (1), pp. 85 - 105
Issue Date:
2009-01
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Though at the theoretical level, micro-credit is said to play a significant role in poverty reduction, empirical work on the role of micro-credit in poverty reduction is mixed with some studies indicating high levels of employment and income generation and others suggesting a worsening of poverty with micro-credit. Does micro-credit really get to the poor? Does it enhance or impede their productivity? Based on a study of 139 households in one rural area in the Upper West Region of Ghana, we find that: (a) Beneficiaries of micro-credit divert a significant portion of such loans into household consumption - albeit with moderate impact on household productivity and welfare and (b) Micro-credit has modest impact on rural community development.
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