Factors Influencing Access to Credits among Micro and Small Agro-based Enterprises in the Tamale Metropolis, Ghana

Abstract

Access to credits has been noted as a teething problem among agro-based micro and small enterprises (MSEs). The study examined and estimated the factors influencing access to credits using survey data of 155 micro and small enterprise operators selected through multistage sampling technique in the Tamale Metropolitan Assembly in the Northern Region of Ghana. The method of analysis involved the use of binary logit estimations. The study revealed that older entrepreneurs, males, level of education, income, distance from formal credit source, engagement in casual work significantly influenced the access to formal credit. Access to formal credit was however strongly and adversely influenced by number of paid employees, production sector, processing sector and engagement in other economic activities. The age of respondent, high number of years in business, high income, far distance to informal credit source and increased number of casual workers engaged positively influenced access to informal credits while increased expenses on child education and increased number of paid employees inversely affected access to informal credits. Overall access to credit (whether formal or informal), access was found to have influenced by older entrepreneurs, higher income and far distance but older Businesses and being in the service sectors were found to significantly affected access inversely. Government policies should aim at formulating programmes to promote and strengthen economic power of MSE operators to enhance their access to credits; by designing a sustainable and appropriate training programme for business skills development; provide technical assistant and advisory and consultation services.