EFFECT OF MICROCREDIT ON HOUSEHOLDS INCOME IN THE KASSENA-NANKANA MUNICIPALITY OF THE UPPER EAST REGION

Abstract

This study examined the effects of micro credit on beneficiaries’ household income levels. The main objective was to understand the effect of microcredit on poverty reduction in the Kassena-Nankana Municipality. A cross-sectional design was applied in the study. Questionnaires and Key Informant Interviews were the main tools used to collect empirical data. The sample size for the study is 300. Data analysis was qualitative and quantitative. For the quantitative data, difference - in - difference technique was used. The result was positive; signifying that the increase in the income level of the beneficiaries can plausibly be attributed to the micro credit they received. Hence micro credit has caused the mean income of beneficiaries to increase from 550.00 a month to 1,500.00 a month. By implication, their profit margins have increased which enabled them to expand their businesses. The results of the study indicated that micro credit had a positive effect on poverty reduction because profits made out of income generating activities is used to pay school fees, expand their businesses, enhanced their lives and their households through capital accumulation, helped provide them and their households with decent shelter and it provides an avenue for the beneficiaries to receive training on how to utilize micro credit and to manage businesses thereby avoiding losses. The conclusion is that micro credit increases the profit margins of beneficiaries and it helps them to stay and expand their business which increases their income levels in the long run. Recommendations made were: beneficiaries should be sensitized on early payment of loans, capacity building workshops and seminars should be organized for people intending to apply for microcredit, meetings should be organized for applicants on the procedures, government officials should avoid interfering with the work of micro-finance institutions and adequate resources should be allocated for intensive training of beneficiaries of micro credit on proper utilization.