Poverty and population incidence: do they matter for microfinance outreach in Ghana?

James A. Peprah, University of Cape Coast
Samuel K Annim, University of Cape Coast

Microfinance as a development tool has the objective of alleviating poverty. Over the years microfinance institutions have multiplied in numbers engaging in variety of poverty reduction programmes. Using all MFIs, poverty levels of less than one dollar a day and district population figures, the study seeks to find out what attract institutions into a particular location. Is it poverty incidence or population density that serves as pull and push factors for MFIs to concentrate in any of the ten regions of Ghana? The study indicates that institutions are established in areas where there are economically active potential clients and not just poor people. MFIs are not driven by poverty incidence but rather the size of population in a particular area. Districts that have high levels of poverty but sparsely populated will not attract MFIs as is witnessed in the northern Ghana. This means that such will continue to be under-developed.