ACCRA, Ghana (WOMENSENEWS)--Margaret Agyeman watches as Nii Aryee Quaye opens her banking passbook and counts the five bills tucked inside. Perched on plastic chairs inside Agyeman's tiny market shop, Quaye takes her regular daily contribution to her savings account: 100,000 Ghanaian cedis, worth about $10.80. Quaye records the amount, hands her a receipt and heads back out into the brilliant sunshine.
It's a quick transaction, buffeted by a few pleasantries. Quaye will do this up to 70 times each day, moving from stall to stall, greeting calls of "accountant" from vendors.
Accra's frenzied Makola market is in the heart of the city; thousands of traders mingle with shoppers, taxis and tro-tros, or local minibuses. For several blocks, narrow paths of broken pavement and dirt wind through scores of tiny container shops selling everything from colorful African printed fabric to air conditioners and live chickens.
Through this maze of shops, Quaye collects savings money from clients of his employer, Women's World Bank Ghana. He assigns some of the money to savings accounts, some to payments of microcredit loans they've taken through the bank.
The market women at Makola are among the estimated 60 percent of the Ghanaian population involved in the informal sector and the Women's World Bank is one of scores of microfinance institutions operating in this West African country.
A majority of the recipients here, as in many other developing countries, are women who have established an impeccable repayment record of up to 98 percent, according to microfinancing pioneer Grameen Bank in Bangladesh.
Borrowers routinely pay high annual interest rates--of between 15 percent and 40 percent--reflecting the special costs of this type of highly negotiated credit, which reaches borrowers who don't qualify for standard bank loans and whose accounts must be serviced by itinerant loan officers such as Quaye.
Some critics decry the high rates of interest, but Aba Quainoo, who runs a microfinance consultancy business in Accra, justifies them with a familiar argument. The rates, she says, are far lower than the only alternative.
"Women who can't access microfinance will go to a moneylender who will charge as much as 10 percent a month," Quainoo said.
But while microfinance has proven itself to be cheaper than local moneylenders, the larger question is how the growing billions of dollars that are expected to flow into this credit system over the next few years will affect borrowers. Will the money fund economic development or just leave borrowers marginally better off?
After making his rounds, Quaye returns to the busy office of Women's World Bank, a microfinance network based in New York with affiliates around the world. Staff in a back room are sifting through piles of paper as they prepare to pack up and move to a new, bigger location.
The bank was started in Ghana in 1983, and now has eight branches, including the Makola market branch, as well as a head office in Accra.
There are some 7,000 members at the Makola branch, says manager Eleanor Ofosu-Addo, though not all of them are active.
The minimum microcredit loan they give is 500,000 cedis ($54), the maximum is 100 million cedis ($10,800).
Before a woman can obtain a loan, she must first open a savings account and start putting some money away, Ofosu-Addo says. The idea is that women should get used to setting aside money on a regular basis, so that when it's time to take a loan, they can already have the habit of steady payments.
Ofosu-Addo says the women are not expected to use those savings in repayment of their future loans and if a woman is having trouble repaying, the bank will restructure the loan instead of taking from her savings.
Little Shop in Big Market
Agyeman, 57, has had her container shop in one corner of Makola for about 15 years. Six days a week, she works from 8 a.m. to 4:30 p.m. and employs two workers as well. While her five children are all grown, Agyeman and other family members are looking after three young grandchildren and her savings from her business helps support them.
She's been a member of Women's World Bank for about seven years and has twice taken loans from the bank: one of 10 million Ghanaian cedis ($1,080) and another of 20 million ($2,160). Subject to the whims of her business, repaying the loans on a steady payment rate isn't always easy, Agyeman said.
"Sometimes you get it difficult, sometimes you get it easy, because of the market," she says. "But you manage to pay."
Agyeman says her business wouldn't have folded without the loans, since she does have some savings set aside, but it has allowed her to buy large amounts of products in bulk on trips to Nigeria. That means better bargains and better savings for her.
"It helped me a lot," she says. "I use the money to buy goods and do so many things."
Agyeman made bi-weekly payments on her first loan at a monthly interest rate of 3.2 percent, or about 38 percent annually. When she took out her second loan, the rate had fallen to 3 percent a month, or 36 percent annually.
Borrowing for Rent and Wares
Mary Darkoah, 52, has just taken out her first loan of 25 million cedis ($2,700) to help stock her market business of stationery and school books, which she has run for 15 years. She has recently moved to a new store location within the market and has used her money to pay rent on her second-floor shop. The loan has helped her fully stock her shelves with books.
She's just begun repaying a daily rate of 250,000 cedis ($27). Darkoah says making the payment right now isn't too bad with her daily sales of between 1 million and 5 million cedis.
"It's not all that difficult," she says.
But it will take her nine months to pay off the loan, and Darkoah worries that things will get more difficult in a few months when her sales of schoolbooks will taper off as students go on holidays.
And she's not putting aside any regular savings right now, since a lot of her profit is going toward paying her rent.
She's paying installments of total rent of 65 million cedis for a 10-year lease, plus an extra 300,000 a month.
Darkoah says her microcredit loan has helped her use the savings she has already put aside on paying some school fees for her children and Agyeman has used her loans to expand her business selling household electrical items in bulk. Both women say it has given them more stability and financial flexibility.
"At least I have some money inside (my account)," Agyeman says.
Emily Bowers is a freelance journalist based in Accra, Ghana.
For more information:
"Morgan Bond Marshals Big Money for Microfinance"
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"World Bank Puts Money into Women's Work"
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