Coronavirus is the Latest Dire Challenge Facing Poor Entrepreneurs in Ghana

Please read Whole Planet Foundation and Microfinance Partners Respond to the COVID-19 Crisis.

ID Ghana is helping build strong foundations to help them weather tough times.

This is a photo of a loan group called Unity Group made up of microentrepreneurs in the poor, northern Accra suburb of Pokuase served by Whole Planet Foundation’s Ghanaian microfinance partner ID Ghana. I visited this group in late January and during the meeting asked the leader of the group about the origin of the group and how it formed. I was surprised to learn that the group actually pre-dates ID Ghana and that the members of this group previously received loans from another local organization which had ceased their ability to carry on lending. Subsequently, Unity Group and many others were transitioned into ID Ghana’s portfolio around 2016 to continue receiving training, business loans and savings support from ID Ghana.

ID Ghana: Operating in a Challenging Environment

When we visited ID Ghana this year, it was to check in on how the organization was navigating the challenges facing microfinance institutions in Ghana. Over the past five years over 347 microfinance organizations and 23 microfinance banks have gone under due to a mix of changing government requirements, volatile economic conditions, and a weak finance sector.

However, little did we (or ID Ghana) know that only six weeks after this meeting with Unity Group, the Greater Accra region would be navigating severe restrictions to movement, gatherings and business put in place by the government to prevent the spread of the Coronavirus. 

The head of ID Ghana, Stephen Dugbazah, reports that as of March 15th all group meetings and trainings with microcredit clients had to be suspended as a result of government restrictions on public gatherings. This has also led to a necessary halt to new loans until the organization can reinstate in-person meetings with their client groups.

Building a Strong Foundation through Training and Support

ID Ghana to date has managed to thrive as a high quality, socially minded business finance program for people living in poverty in a country where inequality is rising and the resources to combat it are increasingly harder to come by.  ID Ghana has many strategies to build this strong foundation as a social microfinance organization in Ghana, but it starts with helping their clients to prepare for challenging times. They do this by ensuring all of their members are enrolled in the government health care scheme, encouraging all participants to save into small savings accounts set up by ID Ghana and requiring them to complete ID Ghana’s extensive curriculum of business and financial literacy trainings that staff present with their groups of clients.

During my visit, I witnessed a training titled ‘Avoiding Excessive Debt’ which aimed to help members of the group understand the causes of being under too much debt and how to avoid getting into a position of excessive debt. This lesson alone prepares microentrepreneurs to build strong foundations for themselves as they grow their small businesses.

With a manageable level of credit and a growing savings account, members can more easily weather difficult periods when revenues drop, rather than go out of business. Under the current restrictions in place against the coronavirus it is likely to be a reality for millions of poor entrepreneurs this year. Whole Planet Foundation continues to monitor the situation with our partners and is proud to support microfinance partners who are focused on serving the poor during uncertain and challenging times.

Whole Planet Foundation has been supporting microentrepreneurs in Ghana since 2010, providing $1.3 million to support over 10,000 microentrepreneurs in both northern and southern Ghana through two microfinance partners. WPF began its active partnership with ID Ghana in the southern Greater Accra region in 2017 to help them reach 4,500 new clients with their first business loans through ID Ghana’s entry-level loan program for microenterprises and has provided $500,000 in capital to date. ID Ghana’s new clients receive on average $155 in capital to start or grow a business activity which is then repaid every two weeks over 6 months. ID Ghana supports a range of microenterprises in the small commerce and services sectors and is working now to receive government permission to expand further into rural areas in other regions in order to launch a planned agriculture finance program.

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