Does Microcredit Create Employment For the Poor? The Case of the Microcredit Scheme of Upper Manya Krobo Rural Bank in Ghana

Abstract

The microfinance industry, over the past four decades has grown to become a major development tool of the world, both in terms of beneficiaries as well as the financial inputs that it received. The microfinance concept assumes that, ceteris paribus, credit to the poor, would lead to increased jobs, household well-being and poverty reduction. However, to date, no study has established a link between microcredit and wage employment, which is critical for poverty reduction. This paper argues that microcredit is critical for survivalist self-employment but it does not necessily lead to the creation of wage employment for the jobless. This evidence is from an assessment of how microcredit has contributed to business performance of the clients of the Upper Manya Krobo Rural Bank's microcredit programme in the Eastern Region of Ghana. The paper is based on a doctoral research output that used mixed method approach to collect data from a sample of 420 exits, repeated and permanent microcredit clients. The paper is of the view that microcredit may not lead to paid employment but can help clients start, improve and expand micro-enterprises. Enterprise expansion in this context refers to adding other products/services similar to the existing activity rather than the clients establishing new employable wage enterprises for the jobless. Business and Economics JournalB us ines s a n d E cono m ic s Jo urna l

Transition in Employability and Women Empowerment: Substantiates from Pradhan Mantri Mudra Yojana

“…Yet, they observe more favourable improvements in the cases of non-governmental recipients of microloans than in those of governmental receivers. Emmanuel et al (2015) observe that support through micro-finance alone cannot promote employment opportunities. Commenting on the Upper Manya Krobo Rural Bank’s micro-credit programme, the authors assert that the programme promoted only the development of self-employment activities.…”

“…Several proponents of development policy believe that microfinance can improve women’s employment and degree of empowerment (e.g., Chliova et al, 2015; Hussain et al, 2019). Unfortunately, there are also cases showing how these programmes fall short of their declared objectives (Banerjee & Jackson, 2017; Emmanuel et al, 2015). The findings also show that empowering women explicitly through the utilisation of credit is not always the case; other programme components can also have a positive impact on women’s status (Shetty, 2010).…”