The Effect of Microfinance on the Growth of Micro-Enterprises

1. THE EFFECT OF MICROFINANCE
ONTHE GROWTH OF MICRO-
ENTERPRISES
A QUALITATIVE STUDY OF SINAPIABA SAVINGS & LOANS COMPANY LTD,
BRONG AHAFO-GHANA
Presented By:
John BaptistW. Kabo-Bah
Chiristiana OppongWadie
Doris Owusuaa

2. Outline
•Background of the Study
•Statement of the problem
•Objectives & Significance of the study
•Research questions
•Brief Literature Review
•Methodology
•Data Analysis and Discussion
•Conclusion and Recommendation

3. Background
• SMEs play an important role in Ghana’s economic development1
• SMEs are largest employers of labour in the economy: 70 per cent of
Ghanaian enterprises fall between micro to small sized
2
• Microfinance is perceived as the driving mechanism in propelling most SMEs
overall economic development
3
• Major challenges of the SME sector in Ghana include: Infrastructural decay &
Funding problems etc
4
• A simple question to ask ourselves is Has Microfinance really made impact
on Micro enterprises growth
5

4. Statement of the Problem
The growth of Small and Medium Enterprises(SMEs) has become very prudent as
considered to improving the standard of living and promoting economic
development through its job creation. The establishment of microfinance in Ghana
was meant to help the poor and mitigate the challenges faced by SMEs. Despite the
sprawling of Microfinance Institutions in the country there is still not a clear
correlation in the performance and growth of SMEs. Also some SMEs in the country
are declining due to the difficulties the perceive to encounter in accessing financial
services from MFIs.
The study is therefore to analyze the effect of MFI to the growth of SMEs.

5. Objectives
Objectives
•To provide a profile of SMEs clients of SASL.
•To outline the products and services that SASL offer for
SMEs.
•To examine the effect of SASL on SMEs.

6. Significance of the study
• The study would serve as a reference for future researchers
• It would help government and policy makers in developing
appropriate and realistic frameworks to boost the Microfinance
Sector in supporting the growth of SMEs in the country.
• MFIs will understand the financial and non-financial needs of
SMEs
• MFIs in-depth knowledge of SMEs will help appropriate in
devising trainings to help in promoting the proper utilization of
credit

7. Scope and Limitation
Scope
• The research covered Ghana
with emphasis on SMEs clients
of Sinapi Aba in the Brong
Ahafo Region. The region was
chosen because access to credit
poses the major challenge faced
by some SMEs as MFIs now
have restricted conditions to
financial assistance due to the
incidence in the foldup of some
MFIs in the region
•Limitation
• Some respondents where not in
position to dialogue with
researchers for the fear of
exposing issues of the business
which might affect their
business
• The study was confined to one
MFI (Sinapi Aba) and some
selected SMEs of SASL due to
time and resources constraint

8. Research Questions
•What are the profiles of SMEs clients of Sinapi Aba
Savings and Loans Ltd?
•What are the products and services of Sinapi Aba
available for SMEs clients?
•What effect does SASL have on SMEs?

9. Literature Review MF and SME Nexus By Helms, 2006

10. Methodology
The research is descriptive in nature and employs empirical
survey method in assessing the growth of SMEs in Ghana.
Descriptive statistics were used such as tables, charts etc to show
presentation of data. The study utilized primary sources of data in
which structured questionnaire used. The purpose was to
generate data about the opinion and perceptions of SMEs owners
in relation to their growth.
Study Design

11. Population
•Targeted population constituted 5 staff of SASL and 125
SMEs who were clients of SASL, making a total of 130
targeted respondents.
Sample Size andTechnique
• The study used a sample size of 51. The selected respondents
constituted a member of SASL and 50 SME clients of SASL.
Respondents were selected using the random sampling technique.
.

12. Data Collection
•Primary data was sourced from SASL and clients of SASL
involved in small businesses. This was administered
through the use of questionnaire and interview.
Questionnaire constituted open ended and close ended
multiple questions. The use of questionnaire allowed
responses to be gathered in a standard way, bringing out
objectivity, and reducing bias.
Interview was adopted to ascertain some of the information
that could not be accessed using the questionnaire

13. Analysis Method
•Statistical Package for Social Scientists(SPSS) and
Microsoft Excel were used to analyzed qualitative
data gathered. Results were therefore presented in
figures, tables and chartsto make comprehension
and understanding of findings easy for readers.

14. Data Analysis and Discussion
The profile of SMEs clients of SASL
• Female 52 %
• Male 48 %
Gender
• 18-25: 12 %
• 26-33: 46 %
• 34-41: 34 %
• 42-49: 8 %
Age
distribution
• Manuf. 4 %
• Trading 76 %
• Service 20 %
Line of
business
92%
4%
4%
NUMBER OF EMPLOYEES
0-9 people 10-29 people 30-49 people

15. Cont’
10%
71%
16%
3%
SOURCE OF CAPITAL
Self Friends & Relatives
Partnership Loan
24%
76%
ADEQUATE CAPITAL FOR BUSINESS
Yes No

16. The products SASL offers for SMEs
78%
14%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Friends Media MFI official
SASL products Knowledge
42%
10%
38%
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Loans Business
Training
Savings Others
Patronage of SASL Products &
Training

17. Analysis Cont’
4%
66%
30%
0%
10%
20%
30%
40%
50%
60%
70%
Less than 49% 50-74 % 75-99%
Percentage of Credit granted
3
22
19
6
0
5
10
15
20
25
Less than 1
wk
1-2 weeks 2-3 weeks 3-4 weeks
Duration of Credit granted

18. Analysis Cont.’
18%
6%
56%
20%
Reasons for Loan
Acquisition of Assets
Settlement of Busi. Debts
Increase Working capital
Sourcing Raw Material
96%
4%
SASL loans impact on SMEs
Yes No

19. Effect of SASL products/services on SMES
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Less than 50% 51%-75% 76%-80% 81% & above
8%
28%
50%
14%
Measure of Services of SASL Impact

20. Conclusion
In the research, Microfinance institutions are very important in the development of
SMEs because of its services rendered to SMEs.These MFIs provide services to
SMEs in areas of Manufacturing,Trading, Service provision etc.
Through MFIs ,SMEs are able access Financial assistance, trainings and others
services, and this has help SMEs to increase Sales, savings, profits as well the
acquisition of the necessary skills needed to manage their businesses.

21. However, SMEs need to satisfy one or some of the following
conditions; be account holder of the MFI, must be in the MFI
area, or must not be a loan defaulter in the past.
These conditions however, affect SMEs negatively by delaying
services such as loan disbursement to beneficiaries to carry out
their business activities.

22. Recommendation
In all, we recommend that MFIs need to better assist SMEs
by:
• disbursing loans on time,
• increasing loan sizes,
•making loan conditions flexible
• reducing interest rates charged on loans.
•need to intensify training programmes to upgrade the
managerial skills of SME operators
.

23. MFIs
SMEs
Economic
Dev’t
Summary