SUSTAINABILITY OF SMALL AND MEDIUM SCALE ENTERPRISES IN RURAL GHANA: THE ROLE OF MICROFINANCE INSTITUTIONS

Abstract

This paper is based on a research work undertaken in 2012 on the dynamics of microfinance institutions (MFIs) and their contribution to the development of small and medium scale enterprises (SMEs) in Ghana. It investigates the effects and challenges of MFIs on the development of SMEs in rural Ghana. Using a case study approach, both theoretical and empirical data were sourced to explore the role and impact of MFIs on 93 SMEs in rural Ghana. Although there are challenges of untimely disbursement and repayment of loans, the paper suggests recipients of microfinance products and services are better off in terms of enhancing the activities of their SMEs, improving outputs and ensuring prudent financial management than those without microfinance services. The paper recommends timely disbursement of credit, flexible terms of credit repayment and awareness programmes to ensure the sustainability of SMEs.