Microfinance Services And Financial Performance Of Small And Medium Scale Enterprises In Sekondi-takoradi Metropolis, Ghana

Small and medium enterprises are generally regarded as the primary driver of national development in developed and developing economies; contributing both to their sustainable growth and the creation of employment. In Ghana, SMEs constitute about 92% of enterprises, fund about 70% to the country’s gross domestic product and absorb about 60% of the labour force. Owing to this, the Ghanaian government showed its commitment to ensuring that SMEs performed better as a result of the support received from microfinance institutions, the Ghana Investment Fund, Microfinance and Small Loans Centre and the Venture Capital Trust Fund. In spite of all these critical roles played by SMEs in the economy and the support by government, the performance of SMEs has been dwindling overtime. Hence, the objective of the research was to investigate the effect of microfinance services on the financial performance of SMEs in the Sekondi-Takoradi metropolis, Ghana. Specifically, the research sought to determine the effect of micro loans, micro savings, financial literacy training and micro insurance on the financial performance of SMEs in Sekondi-Takoradi metropolis, Ghana. In addition, the study checked the moderating effect of government regulations on the association between microfinance services and financial performance of SMEs. The study was based on the Schumpeter’s theory of innovation, financial intermediation theory and information asymmetry theory. Explanatory research design was utilized in the assessment of the relationship between microfinance services and the financial performance of SMEs. The researcher gave due considerations to ethical related issues such as confidentiality, privacy, informed consent, and anonymity. The target population of the research was 782 SMEs in the Sekondi-Takoradi metropolis and the sample size was 260 SMEs. A stratified and simple random sampling method was utilized in choosing the 260 SMEs. Semi-structured questionnaires were utilised in the collection of primary data. Descriptive statistics such as frequency distribution, mean, standard deviations, and variance was used. Inferential statistics in the form of multiple regression analysis was used to test the effect of microfinance services on financial performance of SMEs. SPSS was utilized to aid quantitative data analysis. In addition, the qualitative data was analyzed through content analysis.