THEME: Lending for women’s income-generating activities needs to be based on an understanding of the potential risks as well as the benefits.

IFAD’s 1998 evaluation of the Upper-East Region Land Conservation and Smallholder Rehabilitation Project (LACOSREP) provides some useful lessons on lending for women’s income-generating activities. As is often the case, low-income rural families in the Upper East Region of Ghana combine a number of livelihood activities to try to make ends meet. These include farming, migration during the dry season, the occasional paid job (such as quarrying, mining or construction) and micro or small rural businesses. Women usually conduct income-generating activities of one kind or another during the slower periods in agriculture. The large majority of these are traditional, low-capital input and labour-intensive activities. They cover a fairly typical range, including charcoal-selling, household-based food processing, crafts such as basket-weaving, pitoh-brewing (non-Muslims) and petty trading. Women switch from one activity to another according to what is most likely to be profitable at a given time. Women with childcare or other heavy domestic obligations (such as the care of the sick or elderly) may select a less profitable off-farm productive activity in order to combine domestic and productive responsibilities.

The income women generate from their operations may be small, but it plays a significant role in meeting family food needs. This is particularly the case when a harvest is poor, as has happened frequently in the Upper East Region in recent years. Women often do not provide only ‘soup’ ingredients and for small household needs (salt, oil, cooking utensils, soap), but the grains and carbohydrates, such as yams, corn, millet and sorghum. Women also buy clothing for babies and children and often pay for school fees and health care. In carrying out these micro and small-scale activities, women are hampered by lack of time, lack of literacy skills (83% of females over age 9 are illiterate) and poor marketing opportunities.

Shortage of working capital is another traditional constraint that makes it difficult for women to buy and store raw materials, invest in labour-saving or value-added devices or expand their enterprises. With no land collateral and restricted access to formal credit, they have primarily relied on informal sources such as family, friends and traditional moneylenders. These sources can have high interest rates, or they may not always have the funds available for making loans.

According to a 1998 evaluation, women were designed to be 90% of the target group of the income-generating activities component of the IFAD-financed LACOSREP I. A pilot credit scheme was also set up to test the traditional susu savings and credit model and to provide group-based credit. Demand for credit was promoted among the women’s groups, and women were carefully instructed on the importance of repaying on time, with interest. Of the total of 15 047 borrowers identified by the mid-term evaluation, 68% were women. Therefore the project significantly improved women’s access to credit, especially for activities based on food processing, and for marketing. It also gave women technical training on how to process and package locally grown foods for sale. In doing so, it provided some lessons on the risks to be avoided in such lending:

Adapted from:

IFAD - Office of Evaluation and Studies. 1998. Ghana: LACOSREP I, Mid-term Evaluation Report. Rome. July.

IFAD Operations in Ghana