The Effect of Microfinance on Human Capital Development in Ghana: A Cross-sectional Study of Sinapi Aba Trust Microfinance Beneficiaries in Ashanti Region

Abstract

This chapter provides empirical evidence on how microfinance services contribute to the development of human capital to reduce poverty in Ghana. Microfinance institutions provide services that raise incomes and consumption levels of beneficiaries and reduce income inequality. Through their services, microfinance institutions create opportunities for investment in human and social capital assets development. A cross-sectional approach was employed to gather data from 361 beneficiaries of Sinapi Aba Trust (SAT) microfinance services in 2012, using both quantitative and qualitative tools. Findings indicated that microfinance services enabled beneficiaries to expand their human capital assets. It was also revealed that alongside with loan disbursement, SAT included education programmes that added up to enhancing beneficiaries’ outlook. It was recognized that SAT services provided training for awareness creation and sensitization through workshops to inform beneficiaries about topical issues that were development oriented for beneficiaries and their households. The study among others recommended that, government, sponsors and managers of microfinance should collaborate to pull resources for human capital development of beneficiaries.