Outreach and sustainability of inventory credit programme in Ghana

The study examined the outreach and sustainability of the inventory credit programme (ICP) in Ghana using both qualitative and quantitative data between 1996 and 2003. The findings revealed that the outreach of the ICP reached the poor with a depth of 25-47% (nationwide) measured in terms of loan size/GNP per capita. The outreach measured in terms of percentage of female clients served was initially 20%, but fairly increased to 59% over the study period. However, a comparative analysis with two successful MFIs in Ghana and standardized performance benchmarks indicate that the ICP did not perform well in reaching the very poor. The results of the financial performance indicate that the ICP was operationally and financially sustainable. Further, the study showed that the ICP had high loan recovery rate which underlies its profitability. However, the ICP operated with a low efficiency measured in terms of adjusted operational expenses ratio. Based on these findings the study concludes that there is a trade-off between outreach to the poorest and a financial sustainability of the ICP which can be mitigated by the enhanced credit allocation through lower cost structures.