Financial Inclusion Among Rural Households in Ghana

Agyemang Frimpong, Ronald Osei Mensah


In 1991, Cooperative for Assistance and Relief Everywhere (CARE) International, a leading humanitarian organization, launched a unique savings-based microfinance program called a Village Savings and Loan Association (VSLA). Today, the model is being replicated across sub-Saharan Africa. Although previous studies have shown substantial benefits from participating in the VSLA program, these studies likely suffer from selection bias and other methodological weaknesses. This study attempts to improve upon the existing work by examining the impact of one of the first VSLA programs, commissioned by the Progressive Excellence Youth Organisation (PEYORG) in the Asikuma Odoben Brakwa District in the Central Region of Ghana, using both quantitative data from individual surveys, and qualitative data from Focus Group Discussions (FGD) and key interviews. In order to control for selection bias, this study utilizes a control group of new VSLA members who are still in the initial training phase, and also statistically controls for differences in demographic characteristics including age, gender, marital status and education, which may affect program impact. The results suggest that participation in the program has an overall positive impact on various indicators of household and individual welfare, including asset expenditure levels, the development of Income-Generating Activities (IGAs), education expenses, access to health services, nutritional levels, and quality of housing. Such positive results are particularly encouraging given the long-term sustainability of the VSLA model - the program does not rely on outside donor funding and does not require continued support from the founding organization. Overall, these results suggest that the VSLA model is both successful and sustainable. Furthermore, it may offer potential teaching benefits for other Community-Based Finance Organisations (CBFO) in developing countries.

Keywords: Cooperative for Assistance and Relief Everywhere, Village Savings and Loan Association, Progressive Excellence Youth Organisation, Income-Generating Activities, Community-Based Finance Organisations

DOI: 10.7176/JESD/11-4-21

Publication date: February 29th 2020

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