 |
|
|
|
 |
|||
THEME: Rural women have difficulty gaining access to formal credit and savings, which negatively impacts their off-farm enterprises.
Most rural people in Ghana do not have access to a bank, credit union or similar financial service. It was estimated that access by small clients, such as the rural and urban poor, was around 8% in 1998. Access is particularly low for rural people and in certain parts of the country. Needs for both savings and credit access are most urgent among micro and small rural entrepreneurs, many of whom are women. They require such services to escape from the low investment–low production–low returns cycle. Informal mechanisms such as the susu and moneylenders sometimes fill the gap, but they have drawbacks. Generally, small and often semi-formal credit schemes have been more successful than the formal system in reaching such women.
The Bank of Ghana promoted the establishment of rural banks in the seventies, with the idea of encouraging banking habits among rural households and mobilizing rural savings for agriculture, fishing, forestry and other agro-based industries. In 1998, there were 132 rural banks in Ghana. Since then, many of these banks have been closed, for a variety of reasons. Rural banks are very unequally distributed, with the fewest in the upper east, upper west and northern regions. The ownership of rural banks is broad based, and the banks are usually managed and operated by residents of the locality who know the local conditions and people. But most rural women do not have physical access to these banks. For instance, in the north, the ratio of banks to rural clients is 1:100 000, compared with the national average of 1:16 000 to 1:26 000. One bank can serve an area of over 50 000 km2. For the majority of poor farmers, the cost of a trip to the bank is too high, particularly since the process involved in bank loans often requires several trips.
Women are usually further handicapped from using rural banks:
- Women have problems leaving their children and household duties long enough to travel to the bank.
- Even if they can reach the bank, they find the mostly male staff intimidating (90% of staff in most institutions are men).
- Poorer women’s lack of control over resources, such as land and labour, limits their eligibility for loans.
- Illiteracy or semi-literacy creates a further barrier to processing paperwork.
- Since the banks’ ability to lend has been constrained by inflation-induced de-capitalization, often there are insufficient funds available to finance loan requests. In such cases, it is the women who receive lowest priority.
Rural Ghanaian women can also have unequal access to credit union loans. A review of credit unions in Ghana identified several constraints:
- In some credit unions, men did not allow women to borrow for women’s activities.
- Sometimes women’s demand for credit was also constrained by their fear of being in debt.
- The loans that women took out were usually too small for their needs.
- The loan terms and conditions were too rigid to suit women’s needs.
- Most women lacked financial management and business planning skills.
- Many women knew very little about credit union operations and cooperative principles.
The impact of limited access to formal credit on women engaged in off-farm businesses can include:
- inability to purchase raw materials or labour-saving or value-adding technology;
- inability to expand their enterprise because of lack of capital;
- inability to produce quality products because of cheaper and poor-quality inputs;
- inability to store their products for later sales, when prices improve, because of urgent needs for cash;
- pressure to sell at low prices in local markets because of lack of funds for packaging and transport or lack of ability to wait for slower sales in distant markets.
- their restriction to traditional occupations, which historically are low-capital intensive, thus barring them from new money-making activities.
Clearly, the best solution is to bring financial services closer to rural areas and rural women. But women-targeted financing programmes are not always a panacea. Excluding men has been found to produce a ‘boomerang effect’, resulting in hijacking of loans, partial ‘payoffs’ to keep peace in the family, loss of men’s or children’s help in the woman’s small business, refusal to release women’s labour from other chores and even domestic violence. The best ‘gender-sensitive’ approach to microfinance is one that takes account of the needs of both men and women in designing and delivering financial services.
Adapted from:
IFAD, Ghana: Rural Financial Services Project, 2000. Pre-Appraisal Mission
Working Paper: "Re-Packing the Rural Finance Sub-sector in Ghana Poverty Gender and Rural Informal Sector Perspectives" and Working Paper: "Strategy for Mainstreaming Gender with a Specific Focus on Northern Ghana." All secondary sources are as referred to in these documents.
