Implications for Poverty Reduction in Rural Households in Ghana: Economic Activities

The results also showed that the coefficient of acesmf is (0.397) showing a positive relationship with weekly consumption expenditure. This therefore indicates that beneficiaries of MFIs loans spend on the average 40% higher than non-beneficiaries of MFIs loans in the Upper East Region of Ghana holding all other factors constant. This means that benefiting from MFIs loans has the effect of increasing weekly consumption expenditure on basic needs on the average by 40%. As women receive loans from MFIs, these women invest the loans in viable economic activities. This in turn generates (higher) profits or additional incomes which enable them to spend such incomes on their basic needs, thus helping to pull them out of poverty. Again given the fact that beneficiaries of MFIs loan also receive other training in business acumen which enhances their efficiency to better manage their businesses and as such help improve upon their earnings. This finding is consistent with findings from Khandker, which indicated that microfinance reduces poverty by increasing per capital consumption among programme participants and their families. Poverty reduction estimates based on consumption impacts of credit showed that about 5% of programme participants can lift their families out of poverty each year by participating and borrowing from microfinance programmes. Again the results collaborates with the findings of Morduch, which found that households served by the Grameen Bank who were ordered by the amounts they borrowed from the programme, the top quarter enjoys 15% higher consumption per capita than households in the bottom quarter. Also Pitt and Khandker, found that on average, a loan of 100 taka to a female borrower, after it is repaid, allowed net consumption increases of 18 taka, thus also collaborating with the results in this study. Financial services

The age coefficient is given as 0.0477, suggesting that if one’s age increases by an additional year, then weekly consumption expenditure will also increase on the average by 5%. Thus as one ages overtime, she becomes more experienced and skilful in her economic activity and this could increase her efficiency level and for that matter higher earnings which is ultimately translated into increased consumption expenditure per week. However, beyond the age of 43 years weekly consumption expenditure declines with an increase in age given the fact that the coefficient of age-squared (age1 (-0.000556)) is negative. By implication as one ages over and above the age of 43 years, her capacity to garner more resources for consumption begins to wane, thus her weekly consumption level reduces marginally by 0.000556 with an additional increase in age. This has the tendency of increasing poverty levels particular among the aged in the rural areas. The negative impact of this on weekly consumption expenditure may be insignificant though; this could be due to the fact that individuals above 43 years could be receiving remittances from their relatives to augment their consumption expenditure.
The amount of profit per month (amtprof), is also positively associated with weekly consumption expenditure given its coefficient of 0.00134. Thus if profit increases by one cedis (Gh01) per month then weekly consumption expenditure will increase by 0.13%. As the respondents make more profits from their agro-processing business they spend part of these profits on basic needs and for that matter driving them out of poverty. Women engage in off-farm economic activities including agro-processing in other to generate additional income. Such incomes are expended on basic needs so as to bridge the household consumption gap and this contributes to poverty reduction within the household. Therefore as profits increase consumption expenditure also increase. The impact of the amount of profit on weekly consumption expenditure is not that substantial.

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