DECLARATION

I hereby declare that this work is the result of my original piece of research conducted between

February 2011 and May 2011 under the supervision of Mr. Michael D. Dzandu, University of

Ghana, Legon, and that no part therefore of this project work has either been presented in whole

or in part to any other institution for any award.

In places where I have used the language, ideas, expressions, or writing of other people‟s work,

full acknowledgements has been given. I therefore accept full responsibility for any mistakes

contained therein.

Student: OSEI, RICHARD ASIEDU

………………………………… Date: …….. /……. /……. /

Student’s Signature

Supervisor: DZANDU, MICHAEL DZIGBORDI

………………………………… Date: ……… / …….. / ……/

Supervisor’s Signature

2
 ABSTRACT

This study was to assess the perception and utilization of formal financial institutions by

market women in the Accra metropolis. The study was aimed at ascertaining how market women

in Mallam Attah market perceive the formal financial institutions and the extent to which they

utilize them, examine the factors influencing market women‟s patronage or non-patronage of the

formal financial institutions, and the preparedness of the formal financial institutions to do

business with the market women.

The study adopted the survey method and used questionnaires to collect data from a

random sample of 70 market women representing market women trading in various foods stuff at

the Mallam Attah market, Accra. Questionnaires were also used to purposively collect data from

11 banking personnel of some selected financial institutions within the immediate environs of the

market.

The study revealed that the majority of the market women do utilize the financial

institutions but their level of awareness of its operations is low. The study revealed that the

„susu‟ scheme operated by the informal sector is very popular among the market women. The

study also revealed that market women prefer saving with the informal „susu‟ scheme to the

formal „susu‟ scheme by the financial institutions, though most of them are aware of this scheme.

Finally, the financial institutions are also prepared to do business with the market women and

therefore view them as a viable market segment. The study concludes that market women do

utilize the formal financial institutions but the level of awareness of its operations is low. They

also perceived the formal financial institutions positively. Recommendations on how to enhance

market women utilization of formal financial institutions have been made.

3
 TABLE OF CONTENTS

Page

Declaration i

Dedication ii

Acknowledgement iii

Table of Contents iv

List of Tables viii

Abstract ix

CHAPTER ONE: INTRODUCTION

1.1 Background of study 1

1.2 Problem Statement 4

1.3 Purpose of study 5

1.4 Objectives of study 5

1.5 Significance of study 6

1.6 Scope of study 7

1.7 Organization of study 7

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction 9

2.2 The Concept of the Informal Sector 9

2.3 Forms of Informal Financial Markets in Ghana 12

2.4 Relationship between Formal and Informal Financial Sectors 14

4
2.5 Women as Micro Entrepreneurs in the Informal Sector 17

2.6 Accessibility of Market Women to Finance and Credits 19

2.7 Characteristics of Credit Markets in Africa 21

2.8 Economic Empowerment of Women in Informal Sector 25

2.9 Impact of Micro Finance on Market Women 27

2.10 Conclusion 27

CHAPTER THREE: METHODOLOGY

3.1 Introduction 30

3.2 Research Design 30

3.3 Population and sample 31

3.4 Sampling Technique 31

3.5 Sources of Data 32

3.6 Instrumentation 32

3.7 Questionnaire 33

3.8 Mode of Data Collection 35

3.9 Response Rate of Administered Questionnaire 36

3.10 Methods of data Analysis and Presentation of Results 36

3.11 Problems Encounter / Limitation of the Study 36

CHAPTER FOUR: DATA ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Introduction 37

5
4.2 Responses by the Respondents 37

4.2.1 Background of the Staff 37

4.2.2 Saving Behaviour and Source(s) of Income 40

4.2.3 Awareness, Perception and Utilization of the Formal „Susu‟

Scheme by the Banks 44

4.3 Responses by the Bank Officials 48

4.3.1 Preparedness of the Formal Financial Institutions to do Business

with the Market Women. 48

4.3.2 Market Women Perception and Awareness of the Formal

„Susu‟ Savings Scheme 53

4.3.3 Discussions of findings 55

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction 58

5.2 Summary 58

5.3 Conclusion 60

5.4 Recommendations 62

5.5 Suggestions for further studies

6
 LIST OF TABLES

Table 4.1: Age of the market women 38

Table 4.2: Education Level of the Market Women 39

Table 4.3: Years of Trading at the Mallam Attah Market 39

Table 4.4: Rates of inflow 40

Table 4.5: Medium of keeping sales records 41

Table 4.6(a): Saving preference 42

Table 4.6(b): Rate of Savings 42

Table 4.6(c): Amount Market Women save as per their frequency of saving 43

Table 4.6(d): Savings Records Keeping 44

Table 4.7: Sources of Awareness 45

Table 4.8: Perception of Formal Financial Institution by Market Women 47

Table 4.9: Location of Bank 48

Table 4.10: Category of market your bank grant loans 49

Table 4.11: Borrower‟s banks deal with 50

Table 4.12: Categories of borrower‟s banks prefer working with 50

Table 4.13: Perception of the market women of banks 54

7
 ABBREVIATIONS

SAP Structural Adjustment Program

NGO non-governmental organizations

GDP Gross Domestic Product

ICLS International Conference of Labour Statisticians

ILO International Labor Organization

USSR Union of Soviet Socialist Republics

MPS marginal propensity to save

SEED State Empowerment and Economic Development

SPSS Statistical Package for Social Science

8
 DEDICATION

This work is dedicated to my dear Margaret Esi Botchway and bosom friends Mr. Lawrence K

Duah, Miss. Esther Ama Gyebi and Miss Eva Quaynor for their love and support and prayers,

encouragement that has been there for me throughout the cause of this project and beyond. I love

you and thank you.

Special dedications go to my parents and my siblings for their pieces of advice and prayers

throughout this study. May God bless you all.

9
 ACKNOWLEDGEMENT

I want to thank the Almighty God, our Father and Lord Jesus Christ, for his mercies and

protection and love that he has, and continues to bestow upon me. His blessing abound where he

reigns and I am most grateful and forever thankful that he has made it possible for me to

complete this work.

I want to also express my profound gratitude to my Supervisor, Mr. Michael D. Dzandu for his

patient and guidance through this work.

10
 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Provisional results of the 2010 census put the population of Ghana at 24 million out of

which women represent 51.3%. Women therefore account for approximately 51% of the labour

force and are found in almost all kinds of economic activities in the economy; agriculture

(including fishing and forestry), industry (manufacturing) and services (especially wholesale and

retail trade). The majority, however, are found in farming (agriculture, fish processing, animal

husbandry and forestry) and other informal sector activities such as wholesale and retail trading,

with the least of women found in administrative and managerial jobs. However, a much higher

concentration of them are found at the lower echelons of economic activity and are therefore less

likely to influence policy decisions in their favour.

Participation of women at the lower levels of economic activity is explained partially by

their low access to education and other economic resources that could enhance their economic

performance. Lack of access to, and control over, productive resources is one of the major

factors that hamper women‟s equal participation in economic activities and the decision-making

process. It may also be explained by their generally low self-esteem, which is attributable to the

way females are socialized in the society.

With the female population growth rising from 50.7 percent in the 1984 to 50.1 percent in

the 2000 and presently 51.3 percent, the number of these itinerant workers is averagely on the

increase. This is simply because employment rate in the formal sector crawl behind that of the

population. More succinctly, the Structural Adjustment Program (SAP) which started in 1986

resulted in reduction of capacity utilization in the private sector thereby resulting in laying off of

many workers and increase in the number of people employed in the informal sector, especially

11
women (Akanji, 1986). Women presence in the informal sector in developing countries including

Ghana may not be unconnected with the characteristics of the sector which include ease of entry,

reliance on available resources, labour intensivity, employment of adapted technology and the

fact that skills are acquired outside school system (Owualah, 2005).

It should be noted that for any profitable investment, financial capacity availability is a

necessary condition for success. However, reliable studies revealed that most women have low

marginal propensity to save as a result of the incidence of rural poverty. (Todaro, 2004). This

might be due to the high rate of inflation in Ghana, and their inability to engage in investment

opportunities with high expected return which are often risky. It is therefore imperative that

women in the informal sector of the economy will need the support of financial intermediaries to

provide them with required capacity in form of „soft‟ loan.

Financial intermediaries include financial institutions and the capital market. Financial

institutions can further be classified into formal and informal arrangement. In Ghana, formal

(banking) institutions include the Central Bank which is the Bank of Ghana, Commercial banks,

Development banks and Merchant banks offering short to medium term credits, Mortgage,

Savings & Loan Institutions. The informal arrangement includes non-governmental

organizations (NGO), „susu‟, cooperative societies as well as other intermediary and relationship

based credit institutions.

Indeed, the concept of microfinance is not new in Ghana. There has always been the

tradition of people saving and/or taking small loans from individuals and groups within the

context of self-help to start businesses or farming ventures (Asiama and Osei, 2003). Available

evidence suggests that the first credit union in Africa was established in Northern Ghana in 1955

by Canadian Catholic missionaries. However, Susu, which is one of the microfinance schemes in

Ghana, is thought to have originated from Nigeria and spread to Ghana in the early twentieth

century (World Bank, 2003). Microfinance has in the last two decades become a household name

12
in most policy and implementation arenas where its main policy direction is geared towards

poverty alleviation through the redistribution of financial resources in an economy. A segment of

the potential users of financial services have been neglected in the past by the formal financial

institutions. This is due to institutional and structural barriers such as high initial deposit

requirements and the need for immobile collateral. This neglect by the formal financial

institution affect the level of production in the economy and the level of national output-Gross

Domestic Product (GDP) since a large number of the players are excluded from the monetised

economy.

Mallam Attah Market (Malata), is one of the major trading centres in the capital city of

Ghana with Saturdays as market days, but has no proper infrastructure and is wrought with poor

sanitation and an unhygienic environment as pertains in other markets in the city. The market is

the source of foodstuffs and meat products for the residents of Accra New Town, Dzorwulu,

Abelemkpe, Roman Ridge and the Airport residential areas, and its environs. Market women

therefore contribute immensely to the economy of Ghana. Hence, if they are able to access

source of fund with less interest it would impact positively on their profitability. It is not clear

how they perceive and the extent to which the market women utilize the formal financial

institutions.

1.2 Statement of the Problem

The market women in Ghana including those at the Mallam Attah Market are mostly

small scaled business women. Their capital base is mostly very meager. They are mostly on very

small scale because most of them being illiterates have problem of acquiring assistance from the

banking institutions. Illiteracy is a financial risk since interpretation and filing of forms at the

13
banks for loan processing may be done by another person. In effect, they end up with the

informal „susu‟ system. To varying degrees informal financial services are characterised by easy

access, flexibility in loan use, rapid processing, flexibility in interest rates and collateral

requirements. Due to the nature of operation of the women in the informal sector including

Mallam Attah Market (Malata) women, they also find it difficult to get close links with the banks

to acquire financial assistance in order to expand their business. The general perception includes

high interest rates charged on loans by the formal financial institutions, physical collateral

required, intimidating form filling, slow disbursement of loans, untimeliness of loans, delays in

withdrawing funds, mistrust when banks fail/officials abscond and distance to travel.

Since market women do not always make meaningful profit, they are mostly scared to attempt

for assistance from the formal financial institutions and therefore do not attempt to acquire such

facilities at all. There is also no record keeping on their sales. If there is, it is poor. Most of the

market women in the Mallam Attah Market (Malata) have no fixed premises or fixed addresses.

However, the banks want things formal. A customer has to show collateral before loans

are approved. Another problem encountered by the market women is storage. Mostly there are

not enough storage facilities. Most of the markets are open sheds. There are not enough lockable

stores. Thus, their goods are sometimes stolen. No or very little security has been put in place to

ensure safety of their goods. The instability of the inflows of the market women also contributes

to their inability to acquire loans from the formal financial institutions. Generally, the market

women lack finance to purchase more goods to be productive or meet their capital requirements.

This study seeks to investigate how the market women in the Accra metropolis specifically

Mallam Attah (malata) market perceive and utilize formal banking services for their economic

activities.

14
1.3 Purpose of the Study

The purpose of the study is to investigate the perception and utilization of formal

financial institutions by market women in the Mallam Attah market in the Accra metropolis, in

order to make recommendations to enhance the utilization of the formal financial institutions by

market women.

1.4 Objectives for of the Study

The following are the specific objectives of the study:

i. to ascertain how market women in Mallam Attah market perceive the formal financial

institutions and the extent to which they utilize them

ii. to examine the factors influencing market women‟s patronage or non-patronage of the

formal financial institutions

iii. find out the reasons for preference of the „susu‟ scheme operated by the informal

financial institutions among the market women

iv. find out the extent of awareness and utilization of the formal „susu‟ savings scheme

introduced by some financial institutions to the market women

v. find out the preparedness of the formal financial institutions to do business with the

market women.

15
1.5 Significance of the Study

Findings from the study would serve as a source of relevant information for academia by

serving as an additional source of library reference for students and lecturers. By this, further

studies could be replicated in different settings.

It would inform the formal financial institutions of the need of their operations and to

widen their coverage of the „susu‟ scheme by making micro-loans easily accessible to the market

women in the Ghanaian economy.

It would help policy makers in planning effective strategies regarding financial

institutions in order to be friendlier to the market women and also to address problems of specific

sections of the Ghanaian economy.

It would also enhance the market women‟s positive perception and improve their

utilization of formal financial institutions. This in effect will enhance the market women‟s saving

potential, security of their funds and easy accessibility of financial assistance from the formal

financial institutions.

Again, it would help the financial institutions to improve upon their efficiency in

contributing to the growth of the operations of the market women in the Accra Metropolis. This

is because the market women constitute a viable market segments in the economy of Ghana.

1.6 Scope of the Study

The study was limited only to market women at Mallam Attah market in Accra, this is

because the market is one of the oldest in the Accra metropolis and a favorite shopping place for

16
most residents of Accra New Town, Dzorwulu, Abelemkpe, Roman Ridge and the Airport

residential areas, and its environs

The researcher surveyed seventy (70) market women. This was further broken down into

nine (9) main sections i.e. ten (10) each from garden eggs, plantain, tomatoes, corn dough, onion

sellers because they were the largest populated group at the market and five (5) each from meat,

crabs, cassava and yam sellers. The researcher also interviewed eleven (11) banking personnel.

Though other markets cannot be covered, the sample size and blend of activities of the Mallam

Attah Market was representative enough for the whole Mallam Attah market women. The study

focused on how the market women perceive the formal financial institutions, their level of

patronage, preferences for the susu scheme, as well as the willingness of the banks to do business

with the market women.

1.7 Organization of Study

The study has been divided into five chapters.

Chapter one, is the introduction which include the background to the study, statement of the

problem, purpose of the study, objectives, significance, scope and limitation of study.

Chapter two was the Literature Review which covered theory on the perception of financial

services, utilization of the financial services, access to and use of financial services by market

women in Accra Metropolis and „susu‟ scheme of some selected financial institutions.

Chapter three looked at methodology which dealt with the research design, population and

sampling, instrumentation, mode of data collection, method of data analysis and presentation of

results, problem encountered and limitation of the study.

Chapter four dealt with the discussion of findings as per the literature review.

17
Chapter five summarizes and concludes the study and goes on to give some recommendations for

improving women‟s perception and utilization of the formal financial institutions in Accra

Metropolis.

18
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter looked at the review of literature under the following themes; the concept of

informal sector, financial services in Ghana, characteristics of credit market in Ghana,

developing countries characteristics of credit markets in Africa, women as micro-entrepreneurs

in the informal sector, accessibility of market women to finance, and, economic empowerment of

women in informal sector and the impact of micro – finance on market women.

2.2 The Concept of the Informal Sector

Although the concept of the informal sector has been debated since its “discovery” in

Africa in the early 1970s, it has continued to be used by many policy makers, labour advocates,

and researchers because the reality is that it seeks to capture – the large share of the global

workforce that remains outside the world of full-time, stable, and protected jobs and continues to

be important and has likely been increasing over time. At present, there is renewed interest in

informal work arrangements or informal labour markets. This current interest stems from the fact

that informal work arrangements have not only persisted and expanded but have also emerged in

new guises and unexpected places.

The International Conference of Labour Statisticians (ICLS, 1993) adopted an

international statistical definition of the informal sector so defined: namely, all unregistered (or

unincorporated) enterprises below a certain size, including micro-enterprises owned by informal

employers who hire one or more employees on a continuing basis; and own-account operations

19
owned by individuals who may employ contributing family workers and employees on an

occasional basis (ICLS, 1993).

In 2003, the International Conference of Labour Statisticians adopted statistical

guidelines concerning this expanded concept of informal employment to complement the

resolution concerning statistics on the informal sector (ILO, 1993). Informal employment

includes employment in the informal sector (as defined by the ICLS, 1993); and informal

employment outside the informal sector. In non-statistical terms, informal employment broadly

defined includes the informal self-employment namely employers in informal enterprises; own

account workers in informal enterprises; unpaid family workers (in informal and formal

enterprises); and members of informal producers‟ cooperatives (where these exist).

Early debates regarding the causes and characteristics of the informal sector crystallized into four

dominant schools of thought.

The dualist school, popularized by the ILO in the 1970s, subscribes to the notion that the

informal sector is comprised of marginal activities – distinct from and not related to the formal

sector – that provide income for the poor and a safety net in times of crisis (ILO, 1972;

Sethuraman, 1976; Tokman, 1978). According to this school, the persistence of informal

activities is due largely to the fact that not enough modern job opportunities have been created to

absorb surplus labour, due to a slow rate of economic growth and/or a faster rate of population

growth.

The structuralist school, popularized by Moser and Portes (among others) in the late

1970s and 1980s, subscribes to the notion that the informal sector should be seen as subordinated

economic units (micro-firms) and workers that serve to reduce input and labour costs and,

thereby, increase the competitiveness of large capitalist firms. In the structuralist model, in

20
marked contrast to the dualist model, different modes and forms of production are seen not only

to co-exist but also to be inextricably connected and interdependent (Moser, 1978; Castells and

Portes, 1989). According to this school, the nature of capitalist development (rather than a lack

of growth) accounts for the persistence and growth of informal production relationships.

The legalist school, popularized by Hernando de Soto in the 1980s and 1990s, subscribes

to the notion that the informal sector is comprised of „plucky‟ micro-entrepreneurs who choose

to operate informally in order to avoid the costs, time and effort of formal registration (de Soto,

1989). According to de Soto et al, 2000 micro-entrepreneurs will continue to produce informally

so long as government procedures are cumbersome and costly. In this view, unreasonable

government rules and regulations are stifling private enterprise. More recently, de Soto has

championed property rights as a means of converting the informally-held property of informal

entrepreneurs into real capital (de Soto, 2000).

The il-legalist school, popularized by neo-classical and neo-liberal economists over the

decades, subscribes to the notion that informal entrepreneurs deliberately seek to avoid

regulations and taxation and, in some cases, to deal in illegal goods and services. This

perspective is associated with the notion that the informal economy is an underground or black

economy. According to this school of thought, informal entrepreneurs choose to operate illegally

– or even criminally - in order to avoid taxation, commercial regulations, electricity and rental

fees, and other costs of operating formally (Maloney, 2004).

Current re-thinking of the informal economy suggests the need for an integrated approach

that looks at which elements of dualist, structuralist, legalist, and il-legalist theories are most

appropriate to which segments of informal employment in which contexts. Clearly, some poor

households and individuals engage in survival activities that have – or seem to have – very few

links to the formal economy and the formal regulatory environment (dualist school); some
21
micro-entrepreneurs choose to avoid taxes (il-legalist school) and regulations (legalist school);

while other informal units and workers are subordinated to larger formal firms (structuralist

school).

2.3 Forms of Informal Financial Markets in Ghana

Aryeetey et al, (1996) attempted a classification of the informal financial markets along

the following category: those operating in one side of the market e.g. lending side or saving side;

relationship – based; and those who serve as intermediaries. Following this method of

classification, informal financial markets in Ghana are classifiable into four basic categories.

The first category of the informal financial institutions in Ghana is those operating in one

side of the market include the following: money lenders: they operate on the lending side.

Commercial money lenders cover a range of financial arrangements with interest rates varying

from 50 – 100% a month. This includes bank rate plus default charges, time value of money and

profit margin. Beneficiaries are often introduced by those well known to the money lender and

agreement bothering on collaterals, defaults charges, interest rate, repayment date and other

terms are clearly spelt out. None of the conditions spelt out are normally relaxed on breach. If a

borrower fails to extinguish his debt voluntarily over a reasonable number of months, the

extinction is involuntarily implemented by confiscating his property (Aryeetey et al, 1996).

The second category of the informal financial institutions in Ghana is the traditional

Mortgagers. They operate on the lending side by providing loans that are interest free with no

time bound for the repayment of the loan, but the trader is expected mortgage either human being

or his property (wife, children or farmland, etc). The provider of the fund will use freely the

collateral as his own profit until the trader offsets the loan obtained fully.

22
 A third category of the informal financial institutions in Ghana is the traders/hire

purchase. This is operated on the lending side. Some traders who are wholesalers or producers

grant credit to customers without charging interest as a way of promoting sales and good public

relation, though some do this at slightly higher prices.

A fourth category of the informal financial institutions in Ghana is the saving collectors

whose job entails taking regular deposits (often daily or weekly) of an amount determined by

each client and return the accumulated sum at the end of a stipulated period (usually a month),

minus a day‟s deposit as commission. These savings collectors form a symbiotic relationship

with market traders, protecting their daily earnings from competing claims. They sometimes

extend advances to their clients. The second category is those that are relationship-based, which

include; departmental Society, where each member of the Departmental Society contributes an

equal sum of money at the end of every month or whenever income is earned. The pooling may

therefore be regular or periodic. The contributions are given to members one at a time. No

interest is charged for using the funds raised in this way. If a member fails to meet his obligation,

the short fall is subtracted from the portion he is supposed to receive when it is her turn to

collect.

There is also the, Rotating Savings and Credit Association, this is another closed-

membership group where all members contribute a predetermined amount at regular intervals

(monthly, weekly, daily to a common pool, which is handed over to each member in turn

randomly or by bidding. This is closely related to departmental society, the difference being that,

in the latter, members is working in the same department. Also, the pool is handed over to the

beneficiary only at the end of the month or when income is earned perhaps daily or weekly

(Aryeetey et al, 1996).

23
2.4 Relationship between Formal and Informal Financial Sectors

The theories for developed countries hold to a large extent for less developed countries as

well. Early studies of the informal sector in developing countries consider the participants of

informal activities as a „reserve army‟ of labor, who mainly survive at low subsistence levels.

For example, Swamina than (1991) recognizes that the primary reason to start with research on

the informal sector in developing countries was related to the problems of mass poverty and

unemployment.

The informal sector was present even in centrally planned economies. Eight theories

describing informal activities in these economies are expected to have particular features.

However, although the economic regime is substantially different than in Western economies,

the informal sector acts as a safety valve for political discontent in planned economies as well. In

addition, while in the West individuals earn incomes that are taxed, in socialist economies the

resources are withheld at the outset by the overall imposition of scarcity as dictated by the central

plan (Feige, 1989).

Grossman (1982) has contributed significantly in providing evidence about the informal

activities in these economies, especially for the USSR. His research has shown that the demand

for informal income and the supply of informal goods and services inevitably reinforced each

other, and exchange of favors in the form of access to goods or services was a salient feature of

the Soviet informal sector. More specifically, some forms of informalization were private

lucrative use of socialist property; theft from the state and cooperatives; bribe taking by officials;

and bribe-giving, in money or natura. He explains this phenomenon as a kind of cyclical

reasoning, which starts with the state compensating for its loss through theft by paying lower

wages. The individual in turn will consider this as an implicit justification to steal from the state -

especially in a situation of pervasive goods shortages- and the circle closes. He concludes that

these characteristics might have been similar in other communist countries of Eastern Europe.

24
 Further theoretical and empirical evidence about the informal sector in former socialist

countries is given by Kornai (1993), Schneider (1997) and Lacko (1998). They observe that the

informal sector activities in these countries, especially in the last period before transition, were

much more widespread than in an „average‟ market economy. This contradicts the common view

that these countries experienced relatively small informal sector, especially compared to

developed countries.

Another typical feature of the informal sector in centrally planned economies is the

existence of both the „second‟ and the „third‟ economies (Ellman, 1989). The „second‟ economy

consisted of hidden transactions of goods or services that were privately produced by individuals.

The „third‟ economy consisted of hidden activities by or within large enterprises, which were

normally tolerated by the party officials in order to achieve the goals of the central plan.

Long after the early studies of centrally planned economies (e.g., by Grossman, 1982),

the informal activities were again a subject of study, but this time during the transition period

these countries were going through. In the literature, the following characteristics appear to be

relatively specific to the informal sector in transition countries.

At the start of transition, the „second‟ economy was legalized (i.e., production and

exchange of private goods), although this does not exclude the possibility that some of the new

private enterprises are operating in the informal sector.

The „third‟ economy is unique to these countries and has remained the same: informal

activities still take place within large enterprises (Dolgopiatova, 1998). Considering the pro- or

anti-cyclical relationship between the formal and informal sector, Fortuna and Prates (1989)

observe that in developing countries the prospering period of export of manufactures entailed

high levels of benefit for entrepreneurs, use of advanced technology, and growth in the scale of

production. In addition, it fostered a process of informalization disguised as small independent

entrepreneurship. Their observation indicates a pro-cyclical relationship. In transition countries,

25
based on an interesting research about Hungary (covering the socialist as well as the transition

period, 1980-1993), Arvay and Vertes (1995) conclude the following. There is a pro-cyclical

relationship during the socialist period (before 1989) and an anti-cyclical relationship during the

transition period (1989-1993).

Johnson et al (1999) argue in favour of the anti-cyclical relationship, because informal

activities cannot make use of market-supporting institutions like courts of law and this may

discourage investments and economic growth. This has occurred in Peru, as reported by De Soto

(1989). Kaufmann and Kaliberda (1996) do not appear to be optimistic either. They claim that

even if it is large, the informal sector is mostly a survival sector where the short-term turnover

dominates the long term one, and where large scale and vital investments do not take place.

Some researchers argue that the informal sector in transition countries is characterized by

almost zero entry and exit costs (Kaufmann and Kaliberda, 1996). This argument, however, has

been criticized because research has shown that the informal sector does have such costs. The

extensive use of barter is another typical element in some of these countries, especially Russia.

Ellman (2000) summarizes several reasons for the growth of barter, such as

criminalisation, tax evasion, a failed privatization strategy, a survival strategy for insolvent and

loss-making firms, suppressed inflation or contagion, or some combination of these factors. In

addition, the new small formal sector businesses in some of these countries hardly show any

trend to expand and grow (Gaddy and Ickes, 1998). Some of the reasons put forward are: to

avoid the attention of tax authorities and criminal organization sand often to delay paying wages

to the workers. Finally, some argue that the rapid growth of the informal sector from a relatively

low base has been a notable feature of some transition economies (Kaufmann and Kaliberda,

1996; and Commander and Tolstopiatenko, 1997). The expansion of the informal sector is also

related to the large share of public expenditure in the GDP of these countries. This was

especially the case in the early years of transition. In addition, less developed countries face a

26
higher level of tax evasion due to their weakened fiscal authority, which in turn shifts a greater

burden of revenue collection to monetary policy (Feige, 1990).

Finally, the recent institutional approach is particularly emphasized in the case of less

developed countries, where the incompatibility between the formal and informal institutions is

more evident than in the developed countries. Consequently, the occurrence of informal activities

in the former countries is expected to be more dominant than in the latter.

2.5 Women as Micro Entrepreneurs in the Informal Sector

Globally, but especially in the individualized world, the informal sector vast scale and

rate of growth presents a dilemma and a challenge. It is a dilemma in that the informal sector

encompasses employment situations which only differ from those in the formal sector but also

infringe upon established rules and laws. It is, however, challenging because of the role of the

informal sector in absorbing a large and growing fraction of the labour force and more so, it

provides a „safety net‟ for the poor, of which the majority are women, who are excluded from

formal employment and income opportunities.

An undeniable fact is the steady growth of the informal sector in almost all developing

countries. It has been reported that in Latin America, eight of every ten new jobs created between

1990 and 1994 were in the informal sector. In Asia, the informal sector absorbed between 40 and

50 percent of the urban labour force and in Africa, the urban informal sector employed some 60

percent of the urban labour force with the potential of creating more than 90 percent of all

additional jobs in this region (ILO, 1997).

Concomitantly, the growing informalization of the economy lead to phenomenal growth

in the number of women engaged in one form of work or the other in the informal sector. In

corroboration of this assertion, reports of women participation rate in the informal sector are: 80

27
percent in Lima, Peru; 65 percent in Indonesia; 72 percent in Zambia and 41 percent in Republic

of Korea (Lim, 1996).

In corollary of positive development in the informal sector, especially in respect of labour

absorbing capacity, the formal sector employment opportunities has been down or even recorded

negative growth rate, aggravated by a rapid and significant growth in the urban labour force.

These are perhaps the „dividend‟ of economic stabilization and restructuring programme

involving deregulation of the economy principally anchored of privatization of quasi-public and

public enterprises in most developing economies. In addition, the reduction of public sector jobs

has thrown many people into the unemployment market especially women because of their

concentration in temporary and lower level jobs, which are often adversely affected by jobs cut

and rationalization. The decline in formal sector employment and wages has forced many women

to turn to remunerated but often informal work.

Also, attitudes and cultural norms are other barriers to women‟s entry into the (formal)

labour market, thus, recourse to the informal sector (ILO, 1998). Women are mostly affected by

poverty, suffered from gender inequality as well as other constraints (Mayoux, 1995); such as;

lack of access to productive resources due to discriminations in property ownership and in

employment, lack of time because of unequal gender division of labour in unpaid productivity

and reproductive activities, lack of skills due to lower levels of literacy and formal education,

and lack of access to markets as a result to their exclusion from the most lucrative markets.

Female entrepreneurs were found to display certain characteristics, developed partly as strategies

to overcome economic and other discriminations (Mayoux, 1995); such as; a greater reluctance

to take risks, a tendency to diversify in order to minimize risks, and the involvement and

investment in social networks.

28
 Consequently, women are fascinated and „naturally‟ attracted to micro enterprises which

provide the opportunity of flexibility, location in and near women‟s homes, ease of entry and

links with the local markets. However, inaccessibility of most women micro and small

entrepreneurs to (informal and formal) credit constitutes a major constraint. Extant studies

revealed start – up capital as a major problem in Trinidad and Tobago, in the Philippines (59

percent) and Bangladesh (76.4 percent) (Mayoux, 1995).

2.6 Accessibility of Market Women to Finance and Credits

Financial services available to market women are diverse, ranging from formal banking

system to easy accessible micro credit provided by informal savings and credit systems. The

formal banks are not popular in disseminating loans to women micro entrepreneurs (Ogunrinola

et al, 2005; Oluwalana and Adegbite, 2005).

Banks are reluctant in borrowing to this category of customers because of observed

women low marginal propensity to save (MPS), thus low deposits in banks. They would rather

focus on big clients to improve their portfolio performance. Banks continue to have difficulty

with small transactions because of high transaction costs, perceived risks, collateral – based

methodologies and strong incentives to lend to the public sector (Aryeetey et al, 1996).

However, in most cases the access problem, especially among formal financial

institutions, is one created by the institutions mainly through their lending policies. This is

displayed in the form of prescribed minimum loan amounts, complicated application procedures

and restrictions on credit for specific purposes (Schmidt and Kropp, 1987). For small-scale

enterprises, reliable access to short term and small amounts of credit is more valuable, and

emphasizing it may be more appropriate in credit programmes aimed at such enterprises.

Schmidt and Kropp (1987) further argue that the type of financial institution and its policy will

often determine the access problem. Where credit duration, terms of payment, required security

29
and the provision of supplementary services do not fit the needs of the target group, potential

borrowers will not apply for credit even where it exists and when they do, they will be denied

access. In addition, the low educational level of market women make it difficult for them to cope

with the necessary paper work required for opening and running formal bank account.

2.7 Characteristics of Credit Markets in Africa

Credit markets in Africa have mainly been characterized by the inability to satisfy the

existing demand for credit in rural areas. However, whereas for the informal sector the main

reason for this inability is the small size of the resources it controls, for the formal sector it is not

an inadequate lending base that is the reason (Aryeetey, 1996b). Rather, the reasons are

difficulties in loan administration like screening and monitoring, high transaction costs, and the

risk of default.

Credit markets are characterized by information asymmetry, agency problems and poor

contract enforcement mechanisms (Nissanke and Aryeetey, 1995). They are mainly fragmented

because different segments serve clients with distinct characteristics. Because of this, lending

units are unable to meet the needs of borrowers interested in certain types of credit. The result is

a credit gap that captures those borrowers who cannot get what they want from the informal

market, yet they cannot gain access to the formal sources. Enterprises that want to expand

beyond the limits of self-finance but lack access to bank credit demand external finance, which

the informal sector is unable to satisfy. Two main theoretical paradigms have been advanced to

explain the existence of this fragmentation: the policy-based explanation and the structural-

institutional explanations (see Aryeetey et al., 1997).

According to the policy-based explanation, fragmented credit markets (in which favoured

borrowers obtain funds at subsidized interest rates, while others seek funds from expensive

informal markets) develop due to repressive policies that raise the demand for funds. Unsatisfied

30
demand for investible funds forces credit rationing using non interest rate criteria, while an

informal market develops at uncontrolled interest rates. Removing these restrictive policies

should therefore enable the formal sector to expand and thereby eliminate the need for informal

finance ( Aryeetey et al., 1997).

According to the structural-institutional explanations, imperfect information on

creditworthiness, as well as cost of screening, monitoring and contract enforcement among

lenders, results in market failure due to adverse selection and moral hazard, which undermines

the operation of financial markets. As a result, lenders may resort to credit rationing in the face

of excess demand, thus establishing equilibrium even in the absence of interest rate ceilings and

direct allocations. Market segmentation then results. Market segments that are avoided by the

formal institutions due to institutional and structural factors are served by informal agents who

use personal relationships, social sanctions and collateral substitutes to ensure repayment. An

extended view of this explanation is that structural barriers result in monopoly power, which

perpetuates segmentation (Aryeetey et al., 1997)

Another view has attempted to explain the existence of informal finance as simply

residual finance, satisfying only the excess demand by those excluded from formal finance.

According to this view, informal sector finance develops in response to the formal sector

controls. Structural and institutional barriers across segments perpetuate segmentation by

providing opportunity for monopoly power. A further explanation is that fragmentation exists

due to inherent operational characteristics of the markets (Aryeetey et al., 1997).

Looking at the role of informal financial sectors in Ghana, Aryeetey and Gockel (1991),

attempted to investigate factors that motivate the private sector to conduct financial transactions

in the informal financial sectors. They argue that the informal sector derives its dynamism from

developments in the formal sector as well as from its own internal characteristics. The informal

and formal sectors offer similar products that are not entirely homogeneous, implying that both

31
sectors cater for the needs of easily identifiable groups of individuals and businesses, but at the

same time serve sections of the total demand for financial services. However, participants from

either sector may cross to the other depending on factors like institutional barriers, availability of

credit facilities and the ease of physical access. Aryeetey and Gockel (1991) examine some of

the factors that influence demand for formal savings and lending facilities in Ghana and observe

that incomes, bank formalities and banks‟ preference for large transactions were the major ones.

Travel costs and time are among other factors that determine transaction costs to the

entrepreneurs.

Besley (1994) has classified major features of rural credit markets that can be used to

explain the existence of formal and informal credit markets in Africa. Among these are the

existence of collateral security and covariant risk. Collateral security is often beyond the reach of

many borrowers in rural areas. But even where this is not the case, the ability of the lender to

foreclose is often limited, making enforcement of loan repayment difficult. Such difficulties help

to explain the use of informal financial markets, which use social sanctions to ensure

enforcement. In rural areas, shocks in incomes that create borrowers‟ potential to default will

affect the operation of credit markets. In most rural economies, borrowers are faced with risks

arising from uncertainties about their incomes. By diversifying their loan portfolios, lenders can

avert such risks. However, credit markets in rural areas are segmented, with lenders‟ loan

portfolios being concentrated on borrowers facing common shocks to their incomes (Besley,

1994).

An important cost of segmentation is that funds fail to flow across groups of individuals

despite the benefits of doing so. According to Besley (1994), this kind of segmentation may also

be reinforced by government regulations. In incomplete markets, rural households could use

partially functioning credit markets to provide insurance against income shocks mainly by

trading insurance. However, due to incomplete information about the nature of the risk faced by

32
each individual, and possible changes in the private behaviour of other individuals, insurance

arrangements are only partial (Aryeetey, 1996b) or are totally absent (Aryeetey and Udry, 1997).

Another important factor of both formal and informal markets relates to penalties. In the

absence of formal contract enforcement mechanisms, both formal and informal institutions rely

on lending practices that emphasize loan screening rather than monitoring, which appears to

suggest more concern with adverse selection than moral hazard (Aryeetey and Gockel, 1991).

Differences emerge in the methods used by formal and informal institutions. Whereas

formal lenders rely more on project screening, informal lenders rely more on the character and

history of the borrower, particularly on personal knowledge of the borrower. Loan monitoring is

rarely done by informal lenders due to the lenders‟ knowledge of borrowers, while in the formal

market it is mainly due to lack of facilities. Transaction costs are generally lower in informal

markets than in formal ones. One of the issues that emerge from this market structure is which

financial institutions are accessible to the rural poor, and which factors determine their demand

for credit from the different sources as determined by their participation decisions (Aryeetey and

Gockel, 1991).

The foregoing literature review shows that financial markets in African countries are

characterized by imperfect and costly information, risks, and market segmentation, resulting in

credit rationing. This is one of the underlying factors in the coexistence of both formal and

informal credit markets serving the needs of the different segments of the market. On the other

hand, policy-based and structural-institutional explanations attempt to explain the coexistence of

both segments of the market as a result of policy and structural-institutional rigidities. This

review provides a conceptual background for an empirical investigation of borrowers‟

participation in credit markets and access to different sources (Aryeetey et al., 1997).

Imperfect information emerges as an important explanation for credit rationing. This is

because, due to information asymmetry, loan terms and conditions are used that affect the

33
behaviour of borrowers. The literature also shows that the assumption that formal interests rates

are the reason borrowers do not use formal credit is not correct. Rather, the unique characteristics

of credit services explain segmentation in the credit market. In addition, lack of effective contract

enforcement and the consequent default risk are also important in loan rationing. Among the

questions that arise out of this scenario is that of an empirical explanation for the coexistence of

both formal and informal credit sources based on the foregoing background. A related question is

that of access to financial services from both sources. In a fragmented credit market, what

explains borrowers‟ decision to borrow at all, and whether to borrow from either formal or

informal segments? (Aryeetey et al., 1997).

2.8 Economic Empowerment of Women in Informal Sector

Development (NEED) and State Empowerment and Economic Development (SEED)

Schemes. ILO (1998) study showed some features common to most programmes to include;

close targeting of most needy borrowers, decentralized loan delivery and management systems

through intermediary institutions or parallel banking system, group formation to ensure financial

discipline and support systems to enhance productivity.

In an earlier study, Christen et al (1995); ILO, (1996) observed that most micro finance

institutions were able to increase patronage by overcoming inability of market women to provide

traditional collateral, such as property, equipment or capital. Instead, they use „collateral

substitutes‟ such as peer pressure (joint liability in arrangements to lending to „solidarity‟

groups) and probation (credit scoring). Other operational characteristics of micro finance

institutions identified by studies include: offering primarily short-term working capital loans;

having a turn-around time for loan approval of less than two weeks, providing services close to

borrowers‟ home or work, charging interest rates significantly above the rate of inflation; and

having lower salary levels than financially less viable programmes. It further asserted that there

34
exist no trades off between reaching the very poor, which are primarily women and reaching

large number of people. Impliedly, there is a positive relationship between target population

reached and women attended to.

Afiemo, (1999) also postulated that micro credit is one of the essential ways of helping

the poor to mobilize and enhance their investment potentials, uphold their dignity and free them

from the shackle of misery and at the same time assist them to make vital contributions to

national development. In addition, micro credit is regarded as the ultimate economic vehicle

through which the poor could be assisted to overcome poverty. As rightly opined by Abacha

(1997), micro credit can make a world of difference in the lives of the poor people because the

line between a poor man and a rich man is the volume of credit facility available to each of them.

Immam (1997) postulated that micro credit has its origin in the traditional setting of

village associations, various age groups and others that are engaged in cooperative activities and

whose members contribute to assist each other in the forms of loan to start or expand individual

businesses. Okafor (2000) identified three categories of intermediaries that are involved in micro

credit delivery operations in Nigeria, namely; public sector specialized credit institutions, banks

and associated financial system institutions and informal sector savings and credit association.

However, the informal micro credit remains the most accessible and relevant to market women.

2.9 Impact of Micro Finance on Market Women

The impact of micro finance on women entrepreneurs have largely been captured through

its impact on women‟s livelihood, which is widely assumed to be positive, and empirically

confirmed in studies in countries such as Bangladesh, India, Sir Lanka and Thailand (ILO, 1998).

Micro finance positive effects on women micro entrepreneurs are observable in;

(i) higher income resulting into women better performance in improving health, nutritional and

educational status of other household members;

35
(ii) increasing women‟s employment in micro enterprises as well as improving the productivity

of women‟s income generating activities

(iii) enhancement of their self-confidence and status within the family as productive partners

capable of improving the income level of family; and

(iv) women increased decision making ability; rights consciousness and better able to resolve

conflict.

However, where funds raised are not utilized directly by women, but handed over to male

member of the family, they nevertheless serve as veritable intermediary between the male

productive members of the family and the credit institutions.

2.10 Conclusion

An undeniable fact is the steady growth of the informal sector in almost all developing

countries. It has been reported that in Latin America, eight of every ten new jobs created between

1990 and 1994 were in the informal sector. In Asia, the informal sector absorbed between 40 and

50 percent of the urban labour force and in Africa, the urban informal sector employed some 60

percent of the urban labour force with the potential of creating more than 90 percent of all

additional jobs in this region (ILO, 1997). In addition, less developed countries face a higher

level of tax evasion due to their weakened fiscal authority, which in turn shifts a greater burden

of revenue collection to monetary policy (Feige, 1990).

Although the concept of the informal sector has been debated since its “discovery” in

Africa in the early 1970s, it has continued to be used by many policy makers, labour advocates,

and researchers because the reality is that, it seeks to capture the large share of the global

workforce that remains outside the world of full-time, stable, and protected jobs and continues to

be important and has likely been increasing over time. At present, there is renewed interest in

informal work arrangements or informal labour markets. This current interest stems from the fact

36
that informal work arrangements have not only persisted and expanded but have also emerged in

new guises and unexpected places.

Consequently, women are fascinated and „naturally‟ attracted to micro enterprises which

provide the opportunity of flexibility, location in and near women‟s homes, ease of entry and

links with the local markets. However, inaccessibility of most women micro and small

entrepreneurs to (informal and formal) credit constitutes a major constraint. Extant studies

revealed start – up capital as a major problem in Trinidad and Tobago, in the Philippines (59

percent) and Bangladesh (76.4 percent) (Mayoux, 1995).

Financial services available to market women are diverse, ranging from formal banking

system to easy accessible micro credit provided by informal savings and credit systems. The

formal banks are not popular in disseminating loans to women micro entrepreneurs (Ogunrinola

et al, 2005; Oluwalana and Adegbite, 2005).

Afiemo, (1999) also postulated that micro credit is one of the essential ways of helping

the poor to mobilize and enhance their investment potentials, uphold their dignity and free them

from the shackle of misery and at the same time assist them to make vital contributions to

national development. In addition, micro credit is regarded as the ultimate economic vehicle

through which the poor could be assisted to overcome poverty. As rightly opined by Abacha

(1997), micro credit can make a world of difference in the lives of the poor people because the

line between a poor man and a rich man is the volume of credit facility available to each of them.

37
 CHAPTER THREE

METHODOLOGY

3.1 Introduction

This chapter dealt with the research methodology that was used in gathering data for the

study. It contains the research design, sampling method, the research instruments, data collection

procedure, method of data analysis, presentation of results, problems encountered and

limitations.

3.2 Research Design

A research design is a framework for conducting a research. It details the procedures

necessary for obtaining information needed to solve a research problem (Malhotra and Birks,

2007). The survey method was adopted for this study. This is because the survey method would

allow one to collect quantitative data which can be analyzed quantitatively using descriptive and

inferential statistics (Saunders, et al, 2007). It was also used because it reduces cost and time

associated with census. Considering the large number of women at the Mallam Attah (Malata)

market, the survey method is preferred. A cross-sectional survey method was used to collect

information from the sample, thus all relevant data were collected at a point in time but within a

one week period.

3.3 Population and sample size

Jankowicz (1995) points out that in order to draw a sample; one has to know how many

people are in the population and how this total is made up from people falling into various
38
subgroups in which you might be interested. The population for the study consisted of all market

women in the Accra metropolis. For the purpose of cutting down cost and limited time available,

the researcher concentrated on all registered market women at the Mallam Attah (Malata) market

in the Accra metropolis, numbering three hundred and eighty eight (388) as at the end of 2010.

Hence a sample size of seventy (70) market women, representing 18% of the registered

population was randomly selected to respond to the questionnaires. This was further broken

down into nine (9) main sections i. e. ten (10) women each from garden eggs, plantain, tomatoes,

corn dough, onion sellers and five (5) women each from meat, crabs, cassava and yam sellers.

This allowed for the representation of all market women at the Mallam Attah (Malata) market.

Eleven (11) financial institutions representatives were also interviewed.

3.4 Sampling Technique

Sampling is the process that allows a researcher to make inferences about a population

based on the nature of the sample (Kumekpor, 2002). It is often used when it is impracticable to

collect data from the entire population. The primary purpose of sampling is to select element that

accurately represent the total population from which the elements were drawn.

Sample selection was based on stratified sampling where market women‟s were selected

in such a way that it comprises a diversified activity and in proportion to the population

classification in terms of their trading status. The nature of the research topic required financial

institutions staff that have the requisite knowledge in market women‟s activities and loan

operations in the financial institutions. As such, the researcher focused on the credit officers and

the credit manager. Purposive sampling technique was used to interview eleven (11) credit

officers selected from eleven (11) financial institutions to find out their views on market

39
women‟s perception and utilization of the financial institutions and strategies to improve market

women‟s awareness and utilization of the financial institutions.

3.5 Sources of Data

Both primary and secondary data was gathered for the study. According to Malhotra and

Birks (2007), the researcher should locate and analyze secondary data before collecting primary

data. They indicated that secondary data which are data that have already been collected for the

purpose other than the problem at hand can help in sample designs and in the details of primary

research methods. For this reason, the researcher first reviewed existing literature made up of

textbooks and other materials found useful from other sources such as the internet. Primary data

is data that will originate by the researcher specifically to address the research at hand. The

Primary data for the study were generated from the questionnaires.

3.6 Instrumentation

The quality of research depends to a large extent on the quality of the data collection tool.

Interviewing and administering questionnaires are probably the most commonly used research

techniques. Therefore designing a good „questioning tools‟ forms an important and time-

consuming phase in the development of most research proposals.

3.7 Questionnaire

Designing a good questionnaire always takes several drafts. In the first draft the

researcher concentrated on the content. Secondly, the researcher looked critically at the

formulation and sequencing of the questions. Then scrutinize the format of the questionnaire.

40
Finally the researcher would test-run to check whether the questionnaire would give the

information required and whether interviewers as well as respondents feel at ease with it. Usually

the questionnaire would need some further adaptation before the researcher can use it for actual

data collection (Seidman I, 1998). For the sake of simplicity semi-structured questionnaires was

used (containing completely open as well as partially pre-categorised and closed questions).

The objectives and variables were used as a starting point. Deciding what questions were

needed to measure (in the case of qualitative studies) to define your variables and reach your

objectives. In developing the questionnaire, the researcher reconsidered the variables chosen and

where necessary, some variables were added, dropped or changed (Spradley, 2007). Another way

to deal with sensitive question (as indicated by the respondent‟s hesitation in answering the

question) is by answering the question indirectly. A common weakness in questionnaires is the

inappropriate transformation of research questions into interview questions (Pretty et al, 1995).

The questionnaire was designed to be „informant friendly. The sequence of questions was logical

for the informant and allowed, as much as possible, for a „neutral‟ conversation, even in more

structured interviews. At the beginning of the interview a limited number of questions

concerning „background variables‟ (eg., age, education, marital status) was asked.

The main research instrument for the study was a questionnaire. Quantitative data were

collected using a questionnaire. The questionnaire used was self-design by the researcher based

on the objectives of the study. The researcher decided on the administration of questionnaire

because they are quick and easy to use. It is also faster to administer and due to the grace period

that was given the respondents to answer the questions, respondent are able to think over the

questions and answer accordingly. Some advantages of the questionnaires are that the responses

are gathered in a standardized way, so questionnaires are more objective, certainly more so than

interviews (Carter and Williamson, 1996).

41
 Also generally it is relatively quick to collect information using a questionnaire. However

in some situations they can take a long time not only to design but also to apply the analyze.

Another advantage over the other instruments is that potentially information can be collected

from a large portion of a group. This potential is not often realized, as returns from

questionnaires are usually low.

However return rates can be dramatically improved if the questionnaire is delivered and

responded to in class time (Carter and Williamson, 1996). It includes closed –ended and open-

ended questions. The close-ended questions provide a variety of multiple choice answers from

which the researcher gave opportunity to respondents to express their opinions. The

questionnaires for market women will be divided into three (3) main sections.

Section A dealt with background of respondents. It included variables like age, gender,

educational level. Section B focused on saving behaviour. Section C will dwell on awareness and

perception of formal „susu‟ scheme of banks. The questionnaire for financial institutions was

divided into three (3) sections. Section A dealt with general information of financial institutions,

which included name of bank and location of bank. Section B focused on willingness of financial

institutions to do business with market women. Section C dwelt on market women perception of

the formal „susu‟ savings scheme.

3.8 Mode of Data Collection

By the use of simple random sampling and systematic sampling, the questionnaires were

administered personally by the researcher. The questionnaires were personally given out to the

respondents. The researcher personally collected all completed questionnaires from the

respondents at the point where the questionnaires were administered to them. Instances where the

42
respondents were not able to fill the questionnaires at the first time of administering it, another

day was rescheduled for it collection. The researcher went through each questionnaire after it has

been filled out to ensure that the respondent has answered all relevant questions. The researcher,

however, respected the right of any respondent who did not answer some of the questions or the

questionnaire as a whole. Also during the interview the researcher did his best to explain the

technical portions of the questionnaire to the market women and bank officials so that the

truthful and accurate responses were obtain.

3.9 Response Rate of Administered Questionnaire

The total number of questionnaire administered was 81. The entire questionnaire were completed

and returned. Barbbi (1991) posits that a response rate of at least 50% is adequate for analysis

and reporting. A response rate of 60% is good, whilst a response rate of 70% is very good.

Fortunately, a very good response rate of 100% was achieved. The high response rate was

achieved because of the personal contact, between the researcher and the respondents during the

distribution of the questionnaire.

3.10 Data Analysis and Presentation of Result

The primary data that were collected from the survey using the questionnaires were

analyzed using the Statistical Package for the Social Science (SPSS). According to Healey

(1993), SPSS was used because it is easily used to define variables, and assigned codes to

respondents, enter data and generate outputs (tables and graphs). Even though an interview was

conducted, the questionnaire was the main mode of data collection. Therefore the data collected

43
was also analyzed using SPSS. The data from the interview were summarized qualitatively and

interspersed with the results obtained with the questionnaires.

3.11 Limitation of the Study

The limitation of the study was the inability to use a large sample size. This was not be

possible because of time limitation and rather busy schedules of the market women as well as the

researcher‟s. That notwithstanding, the sample size used was reasonably large, the findings can

be generalized for the market women in Accra metropolis, however, with caution.

44
 CHAPTER FOUR

DATA ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Introduction

This chapter deals with the data analysis and discussion of the findings. The chapter has

been organized under six themes namely: background of market women, perception of the

formal financial institutions, utilization of the market women, factors influencing patronage of

the formal financial institutions, reasons for preference of the „susu‟ scheme operated by

informal financial institutions, level of awareness and utilization of the formal „susu‟ scheme

among the market women.

4.2 Responses by the Respondents

The respondents were eighty one (81) in total. Out of the 81 respondents, 70 were market

women and 11 were banking officials.

4.2.1 Background of the Market Women

The respondents were made up of 70 market women. Out of the 70 respondents 10

(14.3%) each were from garden eggs, plantain, tomatoes, corn dough, onion sellers and 5 (7.1%)

each were also from meat, crabs, cassava and yam sellers.

The Table 4.1 provides information on age of the market women at the Mallam Attah Market in

the Accra Metropolis. The ages of the respondents ranged between 19 years and 60 years and

over. It can be observed that the majority 50 (71.4%) of the market women were in the active

working age bracket whilst a few, that is, about 20 (28.6%) were nearing their formal retiring age
45
of 60 years. The respondents were traders of different food stuff at the market including tomato,

corn dough, plantain, garden egg, onion, meat, crabs, cassava and yam.

Table 4:1 Age of the market women

Age Frequency Percent

19 - 29 6 8.5

30 - 39 24 34.3

40 - 49 20 28.6

50 - 59 17 24.3

60 + 3 4.3

Total 70 100.0

Source: Authors’ Field Survey, 2011

It was observed that traders of almost all food stuff in the market were covered. However, most

of them, 50 representing 71.4% of the respondents were tomato, corn dough, plantain, garden

egg and onion traders because they form the largest population of the traders in the Mallam Attah

market

The result in Table 4.2 shows the educational level of the market women.

Table 4.2: Education Level of the Market Women

Education background Frequency Percent

Primary level 18 25.7

Middle school / JSS 36 51.4

Technical / vocational 11 15.7

Illiterate 5 7.1

Total 70 100.0

Source: Authors’ Field Survey, 2011

46
It can be observed that about 36 (51.4%) of the market women had middle school / JSS

education, 18 (25.7%) had primary education, 11 (15.7%) had technical/ vocational education

and 5 (7.1%) were illiterates respectively. Generally, the market women had considerably low

levels of education.

The data for the study revealed that the market women had worked at the Mallam Attah Market

for between 1 year and 30 years and over (Table 4.3).

Table 4.3: Years of Trading at the Mallam Attah Market

Year Frequency Percent

1 - 10 29 41.4

11 - 20 23 32.9

21 - 30 14 21.4

31 - 40 3 4.3

Total 70 100.0

Source: Authors’ Field Survey

It can be observed that the majority 29 (41.1%) of the market women had worked for between 1

– 10 years, 23 (32.9%) had worked for between 11 – 20 years, 14 (21.4%) had worked for

between 21 – 30 years and 3 (4.3%) had worked for between 31 – 40 years. Thus, the market

women had worked at the Mallam Attah Market for a considerable number of years.

4.2.2 Saving Behaviour and Source(s) of Income

The data for the study also revealed that the market women have other sources of

income aside their marketing acting activities It was observed that 36 (51.4%) of the market

women interviewed has other sources of income whilst 34 (48.6%) did not have any other source

47
of income. They therefore depend solely on their trading activities for survival. From Table 4.4,

it can be observed that 27 (75.0%) received their other revenues daily, 8 (22.2%) received their

revenues from other sources weekly and only 1 (2.8%) market women received her revenue from

other sources monthly. Generally, the saving habit of the market women interviewed is

considerably good.

Table 4.4: Rates of inflow

Rate of inflow Frequency Percent

Daily 27 75.0

Weekly 8 22.2

Monthly 1 2.8

Total 36 100.0

Source: Authors’ Field Survey, 2011

It can also be observed that the majority 60 (85.7%) of the market women earned

between GH ¢10.00 – GH¢50.00 and 10 (14.3%) earned between GH¢ 60.00 to GH¢100.00.

This suggested that only few of the market women are high earners while the majority is average

earners. The data also shows the sales records of the market women. It was observed that 41

(58.6%) of the market women keep records of theirs sales whilst 29 (41.4%) do not keep records

of sales. Thus, sales record keeping habit of the market women is generally not encouraging.

When the market women were asked how they keep sales, the results in Table 4.5 were

obtained. It can be observed that 29 (41.4%) of the market women representing those who said

yes to keeping sales records on a piece of paper, 19 (27.1%) keeps sales records on walls or put it

into memory, 16 (22.9%) keeps records in cash books whilst 6 (8.6%) have assistant who assist

in their sales record keeping.

48
Table 4.5: Medium of keeping sales records
Medium of Record Keeping Frequency Percent

Piece of paper 29 41.4

Case book 16 22.9

An Assistant 6 8.6

Others (memory, on walls) 19 27.1

Total 70 100.0

Source: Authors’ Field Survey, 2011

Thus, the largely used means of keeping sales records is on a piece of paper, which is not

encouraging.

The result in Table 4.6(a) shows the market women‟s saving preference.

Table 4.6(a): Saving preference

Saving Preference Frequency Percent

Bank 20 28.6

Susu 36 51.4

Bank & Susu 10 14.3

None 4 5.7

Total 70 100.0

Source: Authors’ Field Survey, 2011

It can be observed that 36 (51.4%) of the market women prefer saving with the „susu‟

operated by personnel in the informal sector, 20 (28.6%) said they prefer saving with the banks,

10 (14.3%) said they prefer saving part of their funds with the banks and part with the „susu‟

operated by personnel in the informal sector whilst 4 (5.7%) said they do not save with neither

bank and or „susu‟ operated by personnel in the informal sector. Generally, the market women

prefer saving with the „susu‟ to the banks.

49
The result in Table 4.6(b) shows the results obtained on the market women frequency of saving.

Table 4.6(b): Rate of Savings

Rate Frequency Percent

Daily 41 58.6

Weekly 14 20.0

Monthly 6 8.6

Others 9 12.9

Total 70 100.0

Source: Authors’ Field Survey, 2011

It can be observed that 41 (58.6%) of the market women save on daily basis, 14 (20.0%) save

weekly, 6 (8.6%) save monthly whilst 9 (12.9%) does not have a regular pattern of saving. Thus,

the frequency of saving of the market women is generally good.

The results in Table 4.6(c) show the amount of money saved by the market women as per their

frequency of saving.

Table 4.6(c): Amount Market Women save as per their frequency of saving
Amount Save Frequency Percent

GH¢10.00 - GH¢50.00 66 94.3

GH¢60.00 - GH¢100.00 3 4.3

GH¢160.00 - GH¢200.00 1 1.4

Total 70 100.0

Source: Authors’ Field Survey

It can be observed that the market women save between GH¢10.00 – GH¢200.00 anytime they

save. 66 (94.3%) save between GH¢10.00 – GH¢50.00, 3(4.3%) save between GH¢60.00 –

50
GH¢100.00 whilst 1 (1.4%) save between GH¢160.00 – GH¢200.00. Thus, the market women

make a lot of money from their activities.

The result in Table 4.6(d) shows the medium in which the market women keep records on their

saving.

Table 4.6(d): Savings Records Keeping

Saving Records Frequency Percent

On a piece of paper 10 14.3

In a cash book 51 72.9

By an assistance 4 5.7

Others 5 7.1

Total 70 100.0

Source: Authors’ Field Survey, 2011

It can be observed that 51 (72.9%) keep their saving records in a cash book, 10 (14.3%) keep

their saving records on paper, 4 (5.7%) employed the services of an assistant in keeping their

savings records, whilst 5 (7.1%) use other means of keeping saving records other than stated

above. Thus, quite a good number of the market women keep records of their savings.

4.2.3 Awareness, Perception and Utilization of the Formal ‘susu’ Scheme by the Banks

When the market women were asked if they are aware of any „susu‟ scheme operated by

the banks, 59 (84.3%) answered in affirmative whilst 11 (15.7%) stated otherwise. The study

showed that the majority of the market women were aware of the „susu‟ scheme operated by the

banks and also had appreciable knowledge of it. However, only 21 (30.0%) of those who were

aware of the operation of the „susu‟ scheme of the banks affirmed that it has been communicated
51
to them by the bank officials or personnel. The others, 26 (37.1%) were informed by their

colleague, 10 (14.3%) said they heard of it on television, whilst 2 (2.9%) said they heard of it on

radio (Table 4.7).

The result in Table 4.7 shows how the market women heard about the „susu‟ scheme operated by

the formal financial institution.

Table 4.7: How did you hear about it?

How did they know Frequency Percent

Radio 2 2.9

Television 10 14.3

Colleague 26 37.1

Banks officials 21 30.0

N/A 11 15.7

Total 70 100.0

Source: Authors’ Field Survey, 2011

It can be observed that the majority 26 (37.1%) heard of the „susu‟ scheme operated by the

financial institutions from their colleagues, 21 (30.0%) heard of it from the banks officials, 10

(14.3%) heard of it on the television whilst 2 (2.9%) heard of it on radio. Generally, the majority

of the market women have heard about the „susu‟ scheme operated by the formal financial

institutions.

On the level of knowledge of the market women to the operations of the banks, 35 (50.0%)

answered in the affirmative whiles 35 (50.0%) answered otherwise. Thus, averagely market

women have a fair idea of the operations of the banks. On the issue of whether the banks can

meet the market women financial needs, 43 (61.4%) market women responded in the affirmative

whilst 27 (38.6%) responded otherwise. Generally, the majority of the market women believed

the banks can help meet their financial needs.

52
 When the market women were asked whether they have obtained loan from any formal

financial institutions before, 54 (77.1%) responded in the affirmative whilst 16 (22.9%)

responded otherwise. Some of the market women that said they have never gone for loan from

the formal financial institutions explain firstly, that the formal financial institutions cannot give

them exactly what they wanted, secondly, they have no monies with banks and finally the formal

financial institutions are not trustworthy. However, 53 (75.7%) of the market women that had

obtained loan from formal financial institutions before said they were satisfied with the terms of

the loan. Only 1 (1.4%) said she was not satisfied because the bank delayed the release of the

money for a three weeks and also she was not given all the money she requested. Thus, market

women generally were satisfied with the way the formal financial institutions deal with them.

When the market women that had obtained loan before were asked whether they received

the loan timely, 50 (71.4%) responded in the affirmative whilst 4 (5.7%) responded otherwise.

Generally, the banks deal with the market women with urgency. When the market women who

had acquired loan from the banks were asked whether they had any visit from the banks officials,

32 (59.3%) responded there were no visit by the bank officials whilst 22 (40.7%) responded yes

to the question posed. Thus, it can be observed from the data that the bank officials generally do

not visit the market women. However, the 22 (40.7%) of the market women that were visited by

the bank officials said the bank official visited them once every three (3) months.

When the market women‟s were asked about their preference for local „susu‟ to „susu‟

organized by the financial institutions. The majority, 39 (55.7%) responded in the affirmative

whilst 31 (44.7%) responded no. The 39 (55.7%) that said they prefer the local „susu‟ explained

that, firstly with the local „susu‟ it is easy to access your money anytime you want to, secondly,

the banks are not trustworthy in their operations. The 31 (44.7%) that responded otherwise

believe the formal financial institutions offer better protection to their monies than the „susu‟

system operated in the informal sector. The data thus, indicates that market women generally

53
preferred „susu‟ operated by the informal financial institutions to that operated in the formal

sector.

The results in Table 4.8, shows the perception of formal financial Institution by market

women. When the market women were asked about their perception of the formal financial

institutions, 38 (54.3%) perceived them positively, 24 (34.3%) were indifferent whilst 8 (11.4%)

perceived them negatively.

Table 4.8: Perception of Formal Financial Institution by Market Women

Perception Frequency Percent

Negatively 8 11.4

Positively 38 54.3

Indifferent 24 34.3

Total 70 100.0

Source: Authors’ Field Survey, 2011

The study showed that averagely the market women perceived the formal financial institutions as

doing quite well to help their plight (Table 4.8).

4.3 Responses by the Bank Officials

The respondent was made up of eleven (11) bank personnel sampled from eleven

different banks. The result the researcher obtained shows the location of the selected banks. It

was observed that 5 (45.5%) of the banks were located at the Accra Newtown, 3 (27.3%) were

located at Kwame Nkrumah Circle, 2 (18.2%) were located at Abeka and 1 (9.1%) located at

Adenta. The majority of the banks selected were close to the market and it‟s assumed they

transact business with the market women. The few banks that were located outside the

catchment area of the Mallam Attah Market had offices in the Market (Table 4.9).

54
Table 4.9: Location of Bank
Location of the Financial Institutions Frequency Percent

Accra Newtown 5 45.5

Kwame Nkrumah Circle 3 27.3

Abeka 2 18.2

Adenta 1 9.1

Total 11 100.0

Source: Authors’ Field Survey, 2011

4.3.1 Preparedness of the Formal Financial Institutions to do Business with the Market

Women

When the researcher asked the bank personnel whether market women save with their

bank, all the i.e. 70 (100%) respondent answered in the affirmative. Again, when the researcher

asked the bank personnel whether the bank give loans to the market women, 10 (90.9%)

answered in the affirmative whiles 1 (9.1%) answered otherwise. It was observed that the

majority 10 (90.9%) of the banks grant loans to the market women and only 1 (9.1%) bank said

they did not grant market women loans. When the bank personnel were asked how much they

grant to the market women, they said the amount granted ranges from GH¢300.00 –

GH¢5000.00.

The result in Table 4.10 shows category of market women the banks grant loans to. It can

be observed that 5 (45.5%) of the banks interviewed give loans to all the categories of traders

indicated, 3 (27.3%) gives loans to registered businesses, 2 (18.2%) give loans to petty traders

and 1 (9.1%) give loans to unregistered traders.

55
Table 4.10: Category of market your bank grant loans
Loans Acquisition Frequency Percent

Petty traders 2 18.2

Registered business 3 27.3

Unregistered traders 1 9.1

All traders 5 45.5

Total 11 100.0

Source: Authors’ Field Survey, 2011

Generally, the banks grant loan to all category of traders.

The result in Table 4.11 shows the type of borrowers the banks deal with in addition to

the market women. It can be observed that generally, aside the market women, the banks also

serve other traders like the Small Scale Enterprises, medium scale enterprises and large scale

enterprises.

Table 4.11: Borrower’s banks deal with

Other Borrowers banks deal with Frequency Percent

Small Scale Enterprises 2 18.2

Medium Scale Enterprises 2 18.2

Large Scale Enterprises 2 18.2

Small Scale Enterprises & Medium Scale

2 18.2
Enterprises

All 3 27.3

Total 11 100.0

Source: Authors’ Field Survey, 2011

The data in Table 4.12 show the categories of borrowers banks preferred working with.

56
Table 4.12: Categories of borrower’s banks prefer working with
Borrower‟s banks prefer Frequency Percent

Market Women 2 18.2

Medium Scale Enterprises 1 9.1

Large Scale Enterprises 2 18.2

Market Women, Small Scale Enterprises & Medium Scale

3 27.3
Enterprises

Small Scale Enterprises & Medium Scale Enterprises 1 9.1

Market Women & Small Scale Enterprises 1 9.1

All 1 9.1

Total 11 100.0

Source: Authors’ Field Survey, 2011

It can be observed that the banks do not have a particular business that they target to do

business with. The 3 (27.3%) that said they prefer market women explain their reason as follows:

firstly, some say as per their mission statement, they were established to assist traders in these

categories to grow their businesses and also due to lack of collateral they find it difficult to

access loan with the big banks and with 25% guarantee fund they can get loan from them, thus,

the Women‟s World Banking Ghana Ltd. The others said monies are easily collected on daily

basis or upon small pressure on clients monies are paid, thus, the Trackline Financial Services.

Finally, others also said the market women are reliable and they normally get back or loan back

through daily or weekly repayment, thus, the Global Access Financial Services.

When the researcher asked the bank personnel, whether the banks operate „susu‟ scheme.

It was observed that with the exception of 3 (27.3%) of the respondent who said their banks do

not operate „susu‟ scheme, the majority 8 (72.7%) of the respondent answered in the affirmative.

Thus, the majority of the banks operate „susu‟ scheme. When the bank personnel were asked
57
whether their „susu‟ scheme covers the market women, it was observed that 8 (72.7%) of the

respondent answered in the affirmative whilst 3 (27.3%) answered otherwise. Thus, the majority

of the banks that operate „susu‟ scheme cover the market women. When the researcher again

asked the bank personnel whether they sometimes fail to grant loans to market women, 10

(90.9%) answered in the affirmative whilst 1 (9.1%) answered otherwise. Generally, banks fail to

grant market women loans sometimes.

The reasons they assign to denying market women loans at times includes: failure to

satisfy all the necessary requirements like provision of a guarantor, failure to meet requirement

such as guarantors, cash collateral, permanent place of selling etc, not all of them show credit

worthiness, they do not meet the requirements of a consistent six months savings without

withdrawing and finally when a client defaults in her repayment, the institution does not grant

loans in her subsequent request.

The researcher asked the bank officials whether the banks ask for security against loans

granted, the entire respondents answered in the affirmative. Generally, all the banks asked for

security against loans granted to market women. When the researcher enquired of the type of

security they prefer, their responses include the following: stock guarantor and 25% guarantee

fund, cash collateral i.e. they need to make or to have contributed 25% of the amount they asked

for. In some cases a guarantor is also required, cash collateral (lean), stock and at times

household items, a house or land is preferred, and in the absence the institution can use their

stock.

When the researcher asked the bank personnel whether they find it difficult recovering

loans from the market women. It was observed that 8 (72.7%) of the bank personnel answered in

the affirmative whilst 3 (27.3%) answered otherwise. When the researcher enquired of the

reasons why they find difficulty in recovering loans from the market women, some said their

logistics for recovery is woefully inadequate, some of the clients relocate and it becomes difficult
58
to recover, if monies are not collected on daily basis, they tend to default, some clients are not

able to sell off their goods in time and so may have challenges paying back the loans and some

of the market women divert the purpose of the loan and desist from selling at the market when

they default.

4.3.2 Market Women Perception and Awareness of the Formal ‘Susu’ Savings Scheme

The result obtained also shows the awareness of the existence of „susu‟ saving scheme by

the banks. Thus, 10 (90.9%) of the bank personnel answered in the affirmative the market

women are aware of their „susu‟ saving scheme whilst 1 (9.1%) answered otherwise. The study

shows that the market women are aware of the bank‟s loan facility. The following are the

responses obtained from the bank personnel when the researcher asked the bank officials how the

market women became aware of their loan facilities. They said the market women became aware

through market storms, personal selling and advertisement and also by their own friends who

knows about the scheme, awareness creation, marketing campaigns or marketing teams go out to

canvas for the clients per the facility that the company offers. Some banks undertake twice a

week collection of deposits at the market and inform the market women about the possibility of

accessing the loans.

When the researcher asked the bank personnel whether the market women patronize their

loan scheme, 9 (81.8%) answered in affirmative whilst 2 (18.2%) answered otherwise. The study

shows that market women patronize the loan scheme of the banks. The results in Table 4:13

show how the bank personnel think the market women perceived the banks. It can be observed

that 5 (45.5%) said the market women were indifferent, 3 (27.3%) think the market women

perceive the banks positively, 3 (27.3%) thinks the market women perceive the banks negatively.

59
Table 4.13: Perception of the market women of banks
Perception Frequency Percent

Negative 3 27.3

Positive 3 27.3

Indifferent 5 45.5

Total 11 100.0

Source: Authors’ Field Survey, 2011

The study shows that generally, market women are indifferent about the banks and their

operations.

When the researcher asked the bank personnel why some market women patronize their

loan scheme, these were the responses; easy to access and their facility is very affordable due to

the rate charged, the terms are reasonably flexible, the market women stand a better chance with

the institutions granting them loans than their competitors, repayment is flexible, some do

qualify and see it as a means to expand their trade, loans on time (after contributing for two

weeks), as source of funds and because of the interest rate and also mode of paying that is daily

basis. When the researcher asked the bank personnel to rate the level of patronage of their loan

scheme by the market women in the Accra metropolis. It was observed that 9 (81.8%) rated the

level of patronage as moderate whiles 2 (18.2%) rated the level of patronage as high. The data

shows that generally, the market women in the Accra Metropolis do not patronize the facilities of

the formal financial institutions effectively and efficiently.

These were the responses obtained from the bank personnel when the researcher asked,

what the market women should do to enhance their access to loans at the banks. The bank

personnel said the market women should at least start running the particular business to convince

the banks that they have a good knowledge and experience in the very business for which they

60
want to secure the loan. They should also make it possible to meet the necessary requirements

demanded by the institutions, especially, concerning guarantors, collaterals, and security where

necessary, make daily savings in their bank account and those who have not open account should

have one. They should cultivate a saving habit, proper records keeping of activities (keep sales

and stock records, keep purchase and sales receipts), increase their deposits or savings to show

the banks they are in a thriving business. Owners of businesses should put themselves on salary

scheme, they should be able to save with the bank in question for three months continuously and

also be able to meet the requirement being it guarantor or cash in a form of lien.

4.3.3 Discussions of findings

The data shows that the market women generally save with the formal financial institution

(banks) and also keep record. Aryeetey and Gockel (1991) examine some of the factors that

influence demand for formal savings and lending facilities in Ghana and observe that incomes,

bank formalities and banks‟ preference for large transactions were the major ones.

The study also showed that the majority 39 (55.7%) of the market women generally

prefer saving with the informal „susu‟ to the banks. This is in line with the assertion of Okafor

(2000). He identified three categories of intermediaries that are involved in micro credit delivery

operations in Nigeria, namely; public sector specialized credit institutions, banks and associated

financial system institutions and informal sector savings and credit associations. However, the

informal micro credit remains the most accessible and relevant to market women. Again,

differences emerge in the methods used by formal and informal institutions. Whereas formal

lenders rely more on project screening, informal lenders rely more on the character and history of

the borrower, particularly on personal knowledge of the borrower. Loan monitoring is rarely

61
done by informal lenders due to the lenders‟ knowledge of borrowers, while in the formal market

it is mainly due to lack of facilities. Transaction costs are generally lower in informal markets

than in formal ones. One of the issues that emerged from this market structure is which financial

institutions are accessible to the rural poor, and which factors determine their demand for credit

from the different sources as determined by their participation decisions (Aryeetey and Gockel,

1991).

The study revealed that the banks deal with all categories of traders. This opposed the

claim the banks are reluctant in lending to this category of customers because of observed

women low marginal propensity to save (MPS), thus low deposits in banks. They would rather

focus on big clients to improve their portfolio performance. Banks continue to have difficulty

with small transactions because of high transaction costs, perceived risks, collateral – based

methodologies and strong incentives to lend to the public sector (Aryeetey et al, 1996).

The data for the study also show that market women generally patronize the „susu‟

operated by the formal financial institutions. This is in line with Afiemo, (1999) who postulated

that micro credit is one of the essential ways of helping the poor to mobilize and enhance their

investment potentials, uphold their dignity and free them from the shackle of misery and at the

same time assist them to make vital contributions to national development.

Again, the study shows that banks grant loans to the market women but asked for security

against loans granted to market women. In an earlier study, Christen et al (1995); ILO, (1996)

observed that most micro finance institutions were able to increase patronage by overcoming

inability of market women to provide traditional collateral, such as property, equipment or

capital. Instead, they use „collateral substitutes‟ such as peer pressure (joint liability in

arrangements to lending to „solidarity‟ groups) and probation (credit scoring).

62
 Finally, the study revealed that the banks sometimes fail to grant market women loans.

This agrees with Ogunrinola et al, 2005; Oluwalana and Adegbite, 2005, who said the formal

banks are not popular in disseminating loans to women micro entrepreneurs. Another important

factor of both formal and informal markets relates to penalties. In the absence of formal contract

enforcement mechanisms, both formal and informal institutions rely on lending practices that

emphasize loan screening rather than monitoring, which appears to suggest more concern with

adverse selection than moral hazard (Aryeetey and Gockel, 1991).

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 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

In this chapter the discussion of the findings, conclusions drawn from the findings, as well as the

implementations of the study and recommendations for further studies have been presented.

5.2 Summary

The main purpose of the study was to assess the perception and utilization of formal

financial institutions by market women in the Accra metropolis. There were questions on how

market women in Accra metropolis perceive the formal financial institutions and the extent to

which they utilize them, patronage and non-patronage of the financial institutions by the market

women, preference of the „susu‟ scheme operated by the informal financial institutions among

the market women, the extent of awareness and utilization of the formal „susu‟ savings scheme

by some financial institutions to the market and the preparedness of the formal financial

institutions to do business with the market women.

In the process of conducting the study, the survey method was adopted. For this purpose

the questionnaire instrument for gathering data was used. As a result the perception and

utilization of the formal financial institutions by market women questionnaire containing twenty-

three (23) items was designed and administered by the researcher. The questionnaire was divided

into two parts namely: saving behavior and sources of income and awareness and perception of

formal „susu‟ scheme of banks. The eighteen (18) items from section B to C are related to issues

of perception and utilization of the financial institutions by market women and it‟s important in

64
the above sub-headings. The first part dealt with issues relating to personal information about

respondents.

The administration of the questionnaire was done by the researcher himself with the

assistance of some banking personnel and market leaders. The target population was market

women in the Accra Metropolis but the actual respondents were sampled from market women at

the Mallam Atta market and eleven (11) banks personnel. A total of 81 questionnaires were sent

out, 70 questionnaires were sent to the market women whilst 11 were sent to the bank personnel.

All the questionnaires were returned representing hundred percent (100%) return rate.

The researcher used SPSS to analyze the results and the interpretations were captured in

chapter four. The data for this study was analysed in chapter four (4) and presented in tables with

brief explanations for clear understanding. Frequencies and percentages were used as statistical

tools to present the results of the study.

The study has establish that the majority of the market women have a good saving habit

and have appreciable knowledge in sales record keeping and means of keeping sales records. The

majority of the market women however, keep sales and savings records in cash books and some

use assistants. On their saving preference, the majority of the market women save with the

informal „susu‟ system. It was found out the market women save with the informal „susu‟

scheme largely because informal financial services are characterised by easy access, flexibility in

loan use, rapid processing, flexibility in interest rates and collateral requirements. The majority

of the market women have a high saving rate with amount saved ranging between GH¢10.00 -

GH¢50.00 per day.

On the issue of awareness and utilization, the majority 59 (84.3%) of the market women

were aware of the formal „susu‟ scheme operated by the financial institutions. Most of the market

65
women were informed mostly by their colleagues and the marketing team of the financial

institutions. However, the knowledge of the operations of the banks among the market women

was assessed and it was found out that the market women‟s knowledge of the financial

institutions operations was average. Most market women do utilize the financial institutions but

the level of utilization is low due to high interest rates charged on loans by the formal financial

institutions, physical collateral required, intimidating form filling, slow disbursement of loans,

untimeliness of loans, delays in withdrawing funds and mistrust when banks fail/officials

abscond. The level of satisfaction of the market women with the terms of the loans acquired was

assessed and it was found out that the majority of them were highly satisfied with the terms of

the loans because they obtained the loans timely.

The market women‟s preference for local „susu‟ to „susu‟ operated by the formal

financial institutions was also assessed and it was found out that the majority of the market

women prefer the „susu‟ operated by the informal financial institutions to that operated in the

formal sector. Their reasons were easy access to funds, flexibility in loan use, rapid processing,

flexibility in interest rates and collateral requirements. The perceptions of the market women

were assessed and it was again found out that the majority of the market women perceive the

formal financial institutions as being positive in their operations.

The issue of the formal financial institutions‟ failure to grant loans to the market women

was assesses and it was found out that the majority of the banks sometimes fail to grant loans to

market women and most said it was due to failure of the market women to satisfy all necessary

requirements such as guarantor, cash collateral and place of permanent selling. The issue of

security against loans to market women was assessed and it was found out that all banks required

security against loans. However, the type of security the banks said they require include stock

guarantor and 25%guarantee fund, cash collateral, house or land and sometimes household items.

66
Finally, the inadequate education about operations of the financial institutions has contributed to

the moderate patronage of the scheme by the market women and the informal sector as a whole.

5.3 Conclusions

Based on the major findings of this study, the following conclusions could be drawn. For

the market women to be able to access funds they should have permanent place of transacting

business, savings account and save regularly which can serve as cash collateral to access funds.

They also must show credit worthiness. The market women do utilize the financial institutions

but the level of awareness of its operations is low. The market women perceived the formal

financial institutions positively. The „susu‟ scheme operated by the informal sector is very

popular among the market and that the market women prefer saving with the informal „susu‟

scheme to the formal „susu‟ scheme by the financial institutions, though most of them are aware

of the „susu‟ scheme operated by the formal financial institutions.

The formal financial institutions are prepared to do business with the market women to

enhance their economic activities. The formal financial institutions however, find it difficult

recovering loans from the market women. This is because some of the market women divert

loans for other purpose; others desist from selling at the market when they default and others are

not able to sell off their goods in time and may have challenges paying back the loans.

67
5.4 Recommendations

The following recommendations are made for consideration by the financial institutions

a) Improving the ‘susu’ scheme

After exhaustively carrying out this research and coming out with the findings that have

been elaborated in the above chapter, the researcher has come to the valid conclusion that

there is more room to improvement in the formal „susu‟ scheme by the financial

institutions.

b) Increase awareness / Knowledge of banking activities

The financial institutions must work inexorably to strengthen their educational campaign

in the informal sector. The survey has proved that though most of the market women

have heard about the banks, they hardly know what it does. The education could be

through durbars, workshops etc.

c) Role of the media

If the scheme should be national in character, then the appropriate media for creating

awareness of the financial institutions among traders is ascertained. For example the

following media can be considered;

 Lobby groups (trades associations, market queen mother‟s etc.)

 The electronic media

d) Organize periodic training for staff

The skills of staff need to be upgraded for them to be effective in their area of work.

Intermittently, training programs will have to be organized for all categories of staff,

irrespective of their department, in so far as it is relevant to their work schedule.

68
 e) Improve Research and Development

With respect to marketing strategies, it is recommended that the financial institutions

should adopt research and development (R&D) as the major marketing tool. This will

focus on identifying new opportunities and applying new technologies to satisfy customer

(market women) needs. In this way, promotion of the utilization of financial institutions

by market women will be enhanced.

5.5 Suggestions for further studies

This study carried out the perception and utilization of formal financial institutions by market

women in the Accra metropolis. In addition to the above,

i. Further studies should be done to find out how best the financial institutions „susu‟

scheme could meet the needs of the informal sector workers in Ghana.

ii. The study can be replicated in different markets in the Accra metropolis.

iii. Comparative study of the perception and utilization of the formal financial institutions in

different markets setting can be carried out.

69
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 Appendix I: Questionnaire

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

INSTITUTE OF DISTANCE LEARNING (IDL)
Questionnaire for Market women
Dear Respondents,

I am a student of Kwame Nkrumah University of Science and Technology undertaking a study

on “Perception and Utilization of formal financial institutions by market women” at Mallam Atta

Market for a partial fulfillment of the award of the Commonwealth Executive Master Degree in

Business Administration. I would be grateful if you could assist me achieve this aim by

answering this questionnaire. You are assured of high confidentiality.

Thank you.

…………………

R. O. Asiedu

Instruction: Please provide answers where required or tick the answer that best fits the question.

A. Background of Respondents

1. How old are you? (i) 19 – 29 [ ] (ii) 30 – 39 [ ] (iii) 40 – 49 [ ]

(iv) 50 – 59 [ ] (v) 60 + [ ]
2. Marital status: (i) Single [ ] (ii) Married [ ] (iii) Widowed [ ]
(iv) Divorced [ ] (v) Separated [ ]
3. Education level: (i) Primary level [ ] (ii) Middle school / JSS [ ]
(iii) Technical / vocational [ ] (iv) Others (specify)
4. Type of trade: (i) Tomato [ ] (ii) Corn dough [ ] (iii) Plantain [ ]
(iv) Garden egg [ ] (v) Onion [ ] (vi) Other (specify): ……………….
5. How long have you been trading? …………………………………………………….

B. Savings Behaviour and Source(s) of Income

6. a) Do you have another source of income apart from trading? Yes [ ] No [ ]
b) If yes, how often do you receive your income from this source?
(i) Daily [ ] (ii) Weekly [ ] (iii) Monthly [ ] (iv) Quarterly [ ]
(v) Bi-annual [ ] (vi) Annually [ ]
7. In your estimation, how much do you earn in a day?
(i) GH¢ 10 - GH¢ 50 [ ] (ii) GH¢60 - GH¢ 100 [ ] (iii) GH¢110 - GH¢ 150 [ ]
(iv) GH¢150 - GH¢ 200 [ ] (v) GH¢ 210 + [ ]
76
 8. a) Do you keep any records of your sales? Yes [ ] No [ ]
b) If yes, how do you keep them?
(i) On a piece of paper [ ] (ii) In a cash book [ ] (iii) By an assistant [ ]
(iv) Others [ ]
9. a) Which of the following do you save with?
(i) Bank [ ] (ii) Susu [ ] (iii) None [ ]
b) If you do not save with a bank, why? ………………………………………………
c) How often do you save?(i) Daily [ ] (ii) Weekly [ ] (iii) Monthly [ ]
(iv) Others [ ]
d) How much do you save each time?
(i) GH¢ 10 - GH¢ 50 [ ] (ii) GH¢60 - GH¢ 100 [ ] (iii) GH¢110 - GH¢ 150 [ ]
(iv) GH¢150 - GH¢ 200 [ ] (v) GH¢ 210 + [ ]
d) How do you keep records of your savings?
(i) On a piece of paper [ ] (ii) In a cash book [ ] (iii) By an assistant [ ]
(iv) Others [ ]
10. What is the purpose of your savings? …………………………………………………
C. Awareness and Perception of Formal ‘Susu’ Scheme of Banks
11. Have you heard of any „susu‟ scheme organized by any of the banks?
Yes [ ] No [ ]
12. If yes, how did you hear about it? (1) Radio [ ] (2) Television [ ]
(3) Newspaper[ ] (4) Colleague [ ] (5) Other [ ], specified: ………………
13. Do you know what the banks do? Yes [ ] No [ ]
14. a) Do you think the banks can meet year financial needs? Yes [ ] No [ ]
b) If no, why? …………………………………………………………………………
15. a) Have you obtained a loan before? Yes [ ] No [ ]
b) If no, why? …………………………………………………………………………..
16. How much loan did you apply for? ……………………………………………………
17. What was the amount approved? ………………………………………………………
18. a) Were you satisfied with the terms of the loan? Yes [ ] No [ ]
b) If no, give reasons: …………………………………………………………………
c) Did you receive the loan at the right time? Yes [ ] No [ ]
d) If no, state duration of delay in obtaining the loan …………………………………
19. Did you have any visit from loan officials or agency? Yes [ ] No [ ]
20. If yes, how often
(i) Once in 3 months [ ] (ii) Once in 6 months [ ] (iii) Once in a year [ ]
21. What amount / percentage of the loan have been paid back? …………………………
22. (a) Do you prefer the local „susu‟ to the formal „susu‟ by the financial institutions?
Yes [ ] No [ ]
(b) If yes, give reasons …………………………………………………………………
23. In summary, how do you perceive the formal financial institutions (banks)
(i) Negatively [ ] (ii) Positively [ ] (iii) Indifferent [ ]
Thank You.

Student: Richard O. Asiedu Tel: 0244-977681 E-mail: yehowaislove@yahoo.com

77
 Appendix II: Questionnaire

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

INSTITUTE OF DISTANCE LEARNING (IDL)
Questionnaire for Banks Officials
Dear Respondents,

I am a student of Kwame Nkrumah University of Science and Technology undertaking a study

on “Perception and Utilization of formal financial institutions by market women” at Mallam Atta

Market as a partial fulfillment for the award of Commonwealth Executive Master Degree in

Business Administration. I would be grateful if you could assist me achieve this aim by

answering this questionnaire. You are assured of high confidentiality.

Thank you.

………………
R. O. Asiedu
Instruction: Please provide answers where required or tick the answer that best fits the question.

A. General Information of Financial Institutions

1. Name of Bank: ……………………………………………………………………………

2. Location of Bank…………………………………………………………………………

B. Preparedness of the Financial Institutions To Do Business with the Market Women

3. (a) Do market women save in your bank Yes [ ] No [ ]

(b) Do you give the market women loan to operate their business Yes [ ] No [ ]

4. On the average how much does your bank grant to market women? ……………………

5. What category of market women does your bank grant loans to?

(i) Petty traders [ ] (ii) Registered business [ ] (iii) Unregistered traders [ ]

6. What type of other borrowers does your bank deal with in addition to market women?

i. Small Scale Enterprises [ ] ii. Medium Scale Enterprises [ ]

iii. Large Scale Enterprises [ ]

78
7. (a) What categories of borrowers does your bank prefer most to work with?

i. Market Women [ ] ii. Small Scale Enterprises [ ]

iii. Medium Scale Enterprises [ ] iv. Large Scale Enterprises [ ]

(b) Why does your bank prefer the category ticked in 7(a) above

………………………………………………………………………………………………

(a) Does your institution operate the formal „susu‟ scheme? Yes [ ] No [ ]

(b) If yes, does the „susu‟ scheme cover market women? Yes [ ] No [ ]

(c) If no, why: ……………………………………………………………………………

8. (a) If no to question 8 (a), does your institution intend to operate the formal „susu‟

scheme? Yes [ ] No [ ]

(b) Does it intend to cover market women? Yes [ ] No [ ]

(c) If no, why: ……………………………………………………………………………

9. (a) Does your institution view market women as constituting a viable market segment?

Yes [ ] No [ ]

(b) If no, why: ……………………………………………………………………………

10. (a) Does your institution sometimes fail to grant loans to the market women?

Yes [ ] No [ ]

(b) If yes, why: ……………………………………………………………………………

11. (a) Does your bank ask for security against loans granted to the market women?

Yes [ ] No [ ]

(b) If yes, what types of securities are preferred? …………………………………………

12. (a) Do you find it difficult recovering loans from the market women? Yes [ ] No [ ]

(b) If yes, why: ……………………………………………………………………………

C. Market Women Perception and Awareness of the Formal ‘Susu’ Savings Scheme

13. (a) Are the market women aware of your loan facility? Yes [ ] No [ ]

79
 (b)If yes, how did they get to know? ………………………………………………………

(c) If no, why? ……………………………………………………………………………

14. (a) Do the market women patronize your loan scheme? Yes [ ] No [ ]

(b) If yes, why? ……………………………………………………………………………

(c) If no, why? ……………………………………………………………………………

15. What do you think is the perception of market women of banks?

a) Negative [ ] b) Positive [ ] c) Indifferent [ ]

16. How will you rate the level of patronage of banks my market women in the Accra

Metropolis a) Very Low [ ] b) Low [ ] d) Moderate [ ] c) High [ ]

d) Very high [ ]

17. What do you think market women should do to enhance their access to loan at your bank?

………………………………………………………………………………………………

................................................................................................................................................

Thank You.

Student: Richard O. Asiedu Tel: 0244-977681 E-mail: yehowaislove@yahoo.com

80