* Rural Financial Services Project (Africa Development Bank, German Agency for Technical Cooperation, World Bank): refers to a project being undertaken by the above bodies to provide financial services to the rural dwellers to enhance development.
* Credit risk: This refers to the degree to which it is likely that a borrower or debtor may not repay a loan or debt. It also means a particular borrower or debtor perceived by a lender or creditor as being particularly not likely to repay a debt. (Microsoft Encarta 2007).
Poverty is one of the problems faced by the people living in the rural areas and this largely affects their lifestyles both socially ...view middle of the document...
The economy of Ghana during the 1960’s was dominated by Agriculture (which constitutes 60%) and government in its efforts to finance this sector established the Agricultural Development Bank in 1965 to specifically address the financial needs of the fisheries and agricultural sector. This further led to the establishment of rural and community banks whose purpose was to lend to agriculture and small-scale industries in the 1970’s and early 1980’s. The first formal micro finance institution in Ghana arose out of the micro savings product of the Post Office System. The service was upgraded to Post Office Savings Bank under the Savings Bank Act 1962 (Act 129), to operate independently within the Post Office System. It attained full bank status as National Savings and Credit Bank in 1972 under NRC Decree 38. The new management abandoned the use of the network of the Post Office System and developed its own, leading to the destruction of the micro savings product.
Just like any other project, microfinance has a structure and key stakeholders. The key stakeholders involved in microfinance are microfinance practitioners, end users, technical service providers, government and supporting institutions. Microfinance practitioners refer to bodies that practice or engage in microfinancing activities on a daily basis. Examples of such bodies are ARB Apex Bank, rural and community banks, some development and commercial banks and Association of financial NGO’s (non- governmental organisations). Another key stakeholder in micro financing is the end users. These are economically active poor who are clients of microfinance products and services. Examples are farmers, self employed and individuals involved in off-farm activities such as basketry. Another stakeholder involved in micro financing activities is the technical service providers. These are bodies that provide business development services to microfinance institutions and their clients. The Government of Ghana is also a key stakeholder in microfinance. In any country where microfinance is being practiced, the government in power is an automatic stakeholder and in Ghana, the government is no exception. The government of Ghana undertakes microfinance through bodies such as Ministry of Finance and Economic Planning and Bank of Ghana (Central Bank).
Supporting institutions also form part of the key stakeholders in microfinance. These bodies help or assist other stakeholders to undertake microfinancing activities. Examples of supporting institutions are Microfinance and small loans sector (MASLOC), The Ghanaian Microfinance Institutions Network and Universities, training and research institutions. All financial institutions that engage in microfinance activities belong to a certain category. There are three categories in terms of classifying financial institutions that undertake microfinance in Ghana. The first group in which most financial institutions fall under is the formal financial...