THE IMPACT OF RURAL BANKS’ MICROFINANCE INTERVENTIONS ON POVERTY REDUCTIONS AMONG THE FISHING COMMUNITIES IN GHANA

Microfinance has become an everyday word in the financial and credit market as an effective tool for poverty reduction and rural socio-economic development. However, poverty still denies many people in developing economies their basic needs. Nearly three decades after the global community welcomed the advent of microfinance as a tool for poverty eradication, people in both the urban and rural areas in developing economies still live in extreme poverty. Although, some progress has been made in developing economies such as Ghana towards meeting the United Nations Millennium Development Goals (MDGs) of halving extreme poverty, a chunk of the population in rural Ghana still lives below the poverty line, which remains unacceptable. These startling statistics have prompted this study to delve deeper to ascertain whether the use of microfinance interventions by rural banks and the methods used to deliver these microfinance interventions are still effective and relevant in the fight to eradicate poverty. This study, therefore, examines and evaluates the impact of rural banks' microfinance interventions and the effectiveness of credit delivery models on poverty reduction among the fishing communities of Ghana. The objectives of the study are to identify and examine the microfinance interventions provided by rural banks aimed at reducing poverty in fishing communities in Ghana and also to analyse the credit delivery models used by rural banks and their effectiveness in reducing poverty in fishing communities in Ghana. The welfarist, institutionalist, and information asymmetry theories underpin the study. The study adopted the pragmatic philosophical stance that employs a mixed-method research design methodology, obtaining data from 302 participants comprising 294 clients of four rural banks and 8 staff of the rural banks operating in the fishing communities in the Volta, Western, Greater Accra and Central region of Ghana through questionnaires and semi-structured interviews.

However, the findings of the study reveals that microfinance intervention has a negative impacts on poverty reduction, empowerment and the credit delivery model(i.e. group liability schemes) have positive impacts on poverty reduction; therefore it cannot be conclusive that microfinance services are pivotal for poverty reduction in the fishing communities in Ghana, unless microfinance providers such as the rural banks inculcate a proper empowerment and training activities coupled with group cohesiveness from the beneficiaries of these microfinance services to make microfinance interventions relevant and an effective tool for poverty reduction. Furthermore, this study contributes to the poverty reduction theories by providing contextual understanding of microfinance provision. Additionally, the study also contributes to microfinance practice by providing a guide to effective interventions designs to inform policymakers to increase the knowledge base and the understanding of rural banks in rural areas in the fight against poverty.