Credit Utilization Patterns among Women Agro-Processors in Ghana: Analyzing Socio-Economic Influences and Implications for Microfinance Institutions

Abstract

Limited access to finance has been a major obstacle for small-scale women agro-processors in underdeveloped nations. Microfinance institutions (MFIs) have been praised for offering customized financial solutions for small-scale firms. Nevertheless, the use of borrowed funds from Microfinance Institutions (MFIs) plays a crucial role in enhancing the overall welfare of female borrowers. This article summarizes the results of a research that investigated the variables that influence the use of credit by women involved in agro-processing in the Northern Region of Ghana. The research is based on the life cycle hypothesis, which posits a connection between productivity and certain socioeconomic factors, such as age. Data was collected from 402 women agro-processors in two districts of the Northern Region of Ghana using a descriptive survey approach. The data was analyzed using descriptive and inferential statistics. The majority (60%) of women agro-processors questioned allocate a significant portion of their borrowed funds towards their agro-processing enterprises. Additionally, they allocate a significant portion (about 13%) of their investments towards other enterprises, as well as a considerable amount (15.4%) towards household spending. Approximately 12% of agro-processors obtained loans for the purpose of lending to others. The research also discovered a notable correlation between women's socio-economic attributes, such as the size of their households, religious affiliation, geographical location, their role as household heads, literacy level, and their use of credit. It is advisable for MFIs to provide training on loan use and financial management as part of their social intermediation efforts.