Abstract:
Small and medium scale enterprises plays a significant role in the globe as well as the in sub-Saharan African economies. The current study determines the effects of Microfinance Institutions on the growth and development of SMEs in Ghana. Specifically, the study determined the contribution of Microfinance Institutions on the entrepreneurial activities that lead to sustainable growth, finding out the challenges faced by SMEs in accessing credit from the Institutions and examining the non-financial service on the performance of SMEs in the Country. The study was limited to Eastern Region, specifically Somanya. In total, 35 SMEs were sampled purposively for the purpose of this study and the data collected were analyzed using SPSS. The study revealed that, Microfinance Institutions operations in the country positively affect the growth and performance of Small and Medium Enterprises especially when credits given to the SMEs are on time. Also, factors like time constraint and access to collateral securities are among the challenges SMEs face in their dealings with MFIs. The study therefore recommended SMEs operators with insufficient capital to take advantage of credit from Microfinance Institutions. The Institutions should also train the SMEs operator on the right use of the funds in order not to default on payments or reduce the default rate.
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