Impact of microcredit on poverty reduction among rural women in Ghana: The case of Upper East Region

Abstract

The literature on microfinance reveals that microcredit is a powerful tool in reducing poverty. In consonance with this, the main objective of this study was to verify the impact of microcredit on poverty reduction among rural women in the Upper East Region of Ghana, using the Heckman method of estimation. In pursuance of this, data was collected from 500 women engaged in agro-processing of whom 250 were beneficiaries of microcredit and 250 non-beneficiaries. The results showed the existence of spatial differences in the levels of poverty in the Region. Respondents from Builsa, Kasena-Nankana, Bongo and Bawku West Districts had higher levels of weekly consumption expenditures and for that matter are better off than their counterparts from the Talensi/Nabdan District. Also the number of income generating activities and the number of sources of borrowing have a positive impact on poverty. The predicted weekly mean consumption expenditure indicated that respondents who received microcred: > are better off than those who did not receive microcredit as the.beneficiaries spend more per week than the non-beneficiaries. By implication, microcredit has a positive impact on poverty reduction among rural women engaged in agroprocessing in the Upper East Region. In the light of this, microcredit intervention should be strengthened in the Upper East Region since it has a positive impact on poverty reduction.