Support to Micro Enterprises Programme

Income Generation, Credit and Strengthening Community Capacity:
The Ghana Example

Phil Bartle, PhD
Chief Technical Adviser, CMP Uganda


This paper describes the "Support to Micro Enterprises Programme," a credit scheme for income generation that was devised and put into practice in Ghana under the SCMP (Strengthening Community Management Programme). The dilemma of whether to use programme funds to provide grants or credit has been resolved by the unique features of this scheme. (1) The basis of the scheme lies in the existence and long tradition of "SuSu" groups where a small group of persons donate small amounts of money on a regular basis and allocate the resulting amount to a selected member each time. The SCMP has, through consulting with women's groups (originally in four of the target communities), provided financial and management training to umbrella groups of recipients, who in turn form solidarity groups. Each member of a solidarity group works to produce some product for sale, or similar income generating activity, rather than as a member of a cooperative, but the group as a whole contributes inputs of a communal interest. As each member contributes small amounts of money each period, the solidarity builds up capital. That capital is then deposited in a nearby commercial bank. The bank in turn, after signing a Memorandum of Understanding with the Ministry, has some money deposited in it from the SCMP (using its IG budget) as capital. The solidarity groups are required to make loans through the regular bank channels and procedures (after encouragement and training from SCMP), and the bank uses the capital deposited by SCMP to make loans to the solidarity group. When a group demonstrates its credit worthiness, then it can get access to normal capital from the bank that is not from the original SCMP deposit, thus opening a channel for sustainability, and freeing up the SCMP capital for use by further target groups.

Introduction; Background

The NSC (National Steering Committee) of the Uganda CMP (Community Management Programme) has charged CMP senior management to make recommendations to it concerning the implementation of one output mentioned in the CMP Project Document; income generation. The debate has continued up to now about the dilemma of offering credit versus grants to small women's groups for use as capital in generating income for themselves. The offering of credit is recommended, because it is expected to make the recipients more accountable, responsible with its use, because they will be required to pay back the loan. Offering credit, however, requires administrative and management capacity that CMP, and the Ministry of Gender which is implementing CMP, simply does not have. While the use of the IG budget by giving small grants to women's groups may be easier to administer by CMP, it is not advised, because it is not seen as a sustainable approach, and does not require the recipient groups to be as accountable for their use of the funds. There have been uncountable horror stories of various credit schemes, in many countries, where the moneys have been diverted, not used for their original objectives, and not paid back as promised, not to mention many other problems that have arisen in this sector, so the National Steering Committee was understandably cautious about implementing this element of the CMP set of activities. As CMP is very eager to ensure that the budget is used to achieve its stated objectives, is committed to sustainability and community strengthening as a method of poverty reduction, it therefore seeks a method of implementing this sector in an effective way. In the middle of 1995, Ghana SCMP (Strengthening Community Management), a sister project to CMP, appeared to have devised a scheme that overcame these hindrances and reasons for hesitation. Because the Uganda CTA was invited to Ghana as a resource person for the West African sub regional pre Habitat II workshop on strengthening community management (1996, January 14-19), CMP Uganda decided to take advantage of the mission to add a further task; the observation of the SCMP Ghana IG scheme, and the preparation of this report to present to the Uganda CMP national Steering Committee. This report is not an evaluation as such, but a result of observations, interviews and summarising, n order to document and report upon the scheme, and any lessons learned up to now.

The SuSu Groups

In many countries in Africa and Asia, small groups of people known to each other, members of the same village or even working mates, form small credit rotation schemes. Every routine period, usually every month, sometimes every forty two days, (2) every member of the group puts in a small, easily collected, amount of money. Those who can afford to do so, put in multiples of amounts put in by those who can put in only the minimum. Some of these may be funeral groups, where the collected capital is given to the member who is most in need of paying funeral expenses. Others are distributed according to communal decisions made each month by the members as a group, who determine which member shall get it each time. Others distribute the total on a random bases by pulling straws. Over a total period, every member gets a turn to obtain the full amount put in by all members. The groups are small, and are viable only because the members know and trust each other, and can use sanctions against offending members based on the well known social control dynamics of small groups.

These groups, and this well known practice, is the culturally acceptable basis for devising and implementing the SCMP income generation scheme in Ghana. Its applicability may vary in other countries.

The modification to the practices of these groups, is that in the SCMP scheme, the amount collected in each period is not simply distributed to a chosen member of the group; it is put into a bank account. Initially these bank deposits are used to build up a starting capital to use as collateral for obtaining a loan. Later the deposits are also used for repayment of the loans.

Since banks do not want to give small loans to individuals, or even to small groups that require small capital, the loans are made to the umbrella groups, who in turn disburse it to the smaller groups who in turn disburse it to their members. It therefore works like a credit pyramid.

In Ghana, within SCMP, the scheme is called "Support to Micro Enterprises." In each participating community, the women's groups are known by different local names.

A Brief History of the SCMP Micro Enterprise Support Scheme

As with many things in CMP, serendipity played a major role in generating this scheme. In 1992, under the professional guidance of the Gender Awareness component of SCMP and from Catalina Trujillo of CMP at Habitat HQ, SCMP Ghana undertook a survey of women's situation and needs in the target areas. The survey was strongly participatory, and revealed a large proportion of women headed households, where women were responsible for economic needs of households, but were characterised by extremely low levels of income. Three of the local women hire to undertake the survey were paid a DSA that totalled among them about 400,000 cedis (about 265,000/=). In discussion with SCMP officers and community members, they asked why that money could not be used to initiate some small enterprises among the community. It could, and it did. A women's group, called So Mu Yie (Hold It Tightly) was formed for the purpose of income generation. The SCMP National Programme Coordinator, Ms Victoria Abankwa, held a series f meetings with the meetings, emphasising that they should asses what they were already doing, what was the economic feasibility of what they planned, what inventory and resources they had and what were needed, and what management skills they needed to be successful. These meetings became the substantive basis for more formal training that came later. By June 1994, the group had invested the money, in packages of 35,000 to 40,000 cedis for each sub group and they were engaged in income generating activities.

Based on the success of this first group, SCMP designed a TOR and hired a consultant, Ms. Efi Sam, a private free lance consultant who had formerly been an NPP for SCMP, to draw up plans for SCMP to attempt to institutionalize the process.

As well as the first group, three more women's groups were identified and formed in other SCMP target communities: Mo Den Bo, Adom, and Won Suom (see the table in Appendix Two.

Individual and Group Responsibilities

In the past, experience has shown that when a large group has a collective responsibility to achieve a productive output, there are not enough social and economic controls to ensure full contribution of every member, and such schemes invite failure and dissolution. In contrast, it is also well known that when individuals pursue some activities, they are less effective and productive than if they can do so collectively and in an organized manner. The SCMP Ghana IG scheme attempts to capitalize on these two contradictory forces.

Through standard social animation methods (3) used by SCMP mobilisers, in each target community, groups of women (4) were called to initial meetings, and formed into solidarity groups. Each person was asked to identify five others that she trusted and felt she could work with. Small groups were then formed of those women who trusted each other, this identification process taking several days. Persons who wanted to participate, but did not have others willing to identify them as trustworthy, were excluded (some others were asked to leave after the group was formed, because they did not participate in meetings and regular contributions). Individual members were not to engage in communal or cooperative activities as a group, but were to pursue their income generation activity (eg the production and sale of palm oil) as individuals, but with marketing, packaging and transport activities done in cooperation with other members of the group. These solidarity groups formed the basis of collecting contributions and obtaining credit, but not collective economic production.

Each solidarity group is composed of five or seven persons (an odd number chosen for cultural reasons and simplicity of accounting). In turn, five or seven solidarity groups form an "umbrella group," (5) which is the unit for making deposits and obtaining loans.

SCMP provided training in several ways. Meetings and workshops provide the financial and management training for organising the solidarity groups and the umbrella groups, for setting up the collection and depositing procedures and routines. SCMP designed and printed the pay books (similar in design to savings account books used by many banks), and distributed them free to participating women when the groups were formed and mobilised. The groups were taken on one-day field visits to another group of women engaged in a similar scheme, set up by WID (Women in Development) another department in the same Ministry of Local Government, which has been running successfully for the last four years. This gave confidence and a working example for members of the groups participating in the SCMP scheme. Even though the scheme was not exactly the same, it demonstrated the value of such field visits as an additional management training method.

The Role of Commercial Banks

Because SCMP and the Ministry of Local Government which is implementing it do not have the mandate, the capacity, or the means, to operate as a bank, the loaning of credit to these groups is done through local commercial banks. A Memorandum of Understanding between the Ministry and the Banks provides the instrument for channelling SCMP funds to be used as capital for income generation. Instead of SCMP putting its money (from its IG budget) directly into the hands of the target groups, it deposits it into the participating banks (eg the Agricultural Development Bank) operating in the areas nearby to the target groups. SCMP offers training and management and finance to the target groups. It then acts a s a broker for introduction of the groups to the participating banks. Many or even most of the participating individuals have never been near or inside any bank, and originally feel very distant from such sophisticated institutions. After training, which provides skills, encouragement, organization and confidence, the groups are then introduced to the banks, which require them to follow the standard procedures or making deposits and obtaining loans for income generation activities. The banks are willing to participate because the original capital that they loan to the groups is that which is deposited with them by SCMP (although that is not made explicit to the participating groups). If the group is successful in generating income, repaying its loan, and obtaining credit worthiness, then the group is able to obtain credit from the standard origins of capital from within the bank. The capital originally deposited by SCMP, then, is freed up for use by other target groups, and the process of obtaining without requiring more money from SCMP is made sustainable for the participating umbrella groups.(6)

The Present Status of the Ghana Scheme

Consultations with groups in the target communities, indicated a general desire for assistance in income generation. Often requests were highly unrealistic, some individuals asking for millions of cedis (($1.00 = G.1,500) and having no clear idea about business operations, loans, credit and investment. SCMP commissioned a consultant to investigate possibilities and draw up a plan of action to initiate the scheme. Awareness raising activities in meetings of SCMP with the groups moved their desires towards more realistic requests. It was pointed out that individual commercial loan sharks demanded up to 350 per cent per annum of the loan back in interest, and that bank loans were considerably cheaper (but not free).

Although SCMP is operating in eleven communities on a pilot basis, this IG scheme has been initially implemented in four of the target communities. After only a half year of operation, it is too soon to expect the level of success demonstrated by the earlier WID scheme, but all indications reveal that it is well on the way to being successful and sustainable.

Monitoring and Backstopping

In Suogyaman, the SCMP District Coordinator meets members of the micro enterprises women's group often, giving them encouragement and praise. He meets them all once a week, Thursday afternoons, for a two hour meeting. There he receives reports about their activities, amounts deposited and accumulated, how the production activities are faring, and how the scheme is progressing so far.

Training sessions, both formal and informal,have included topics such as financial planning, accounting, keeping records, making reports, and assessing viability of proposed productive activities. The SCMP National Coordinator makes frequent visits to all four communities to monitor and encourage.

Training Provided by SCMP

Subsequent to the informal training by the National Programme Coordinator, and based on that training, feedback and assessment, two major workshops were held. The topics included management skills, organizational and mobilization skills, credit mobilization, banking skills, financial skills, simple accounting, financial recording and reporting, assessment of inventories and resources available, assessment of management and organizational skills, assessment of market availability for product sales. Emphasis was on encouraging participants to observe and analyse their own resources and potential, and what were practical strategies available. Participants from all four communities attended the two workshops at the same time; they were not held in separate communities, and this was valuable so that participants were encouraged by sharing experiences with those in other areas undertaking similar endeavours.

Recommendations Made by SCMP Officers

As in all IG schemes, it is wise to proceed cautiously, and frequently make and discuss assessments of lessons learned and proposed directions to take.

Initial action, especially loans, should be modest. Early disbursements of large amounts encourage high expectations and unrealistic assumptions. Emphasis should be on workshops with participants where they make assessments of current resources and inventories, management and financial skills, and honest appraisals of potentials for success. Unrealistic optimism may be the greatest danger inviting failure. Assessment is essential, at every stage.

Training should include solidarity and group formation encouragement (re-organization for capacity building), and skill training (in management, financial and credit management, banking skills, credit mobilization, group formation, and resource and personnel management).


The Income Generation scheme of SCMP scheme appears to be a viable method for encouraging poverty reduction in the monetary sector by income generation. SCMP provides awareness raising, mobilization, financial advice, organizational and management training, encouragement, skills, and (indirectly) the initial capital for the IG activities selected by the participating groups. The loans are modest and within the capacities of the groups to repay as they obtain income from their activities. The regular deposit of money is based on traditional and well known practices of credit rotation groups. The groups are small enough, and the members are put into a context in which they will put social sanctions on defaulters, so that they remain sustainable.

It is not recommended that the Uganda CMP adopt this scheme outright and without modification. Every country, like every community, has its own potentials, peculiarities and characteristics. The Ghana SCMP scheme, however, appears to be a creative and brilliant method, overcoming the problems that have plagued many credit schemes of the past. Uganda CMP, and any other programme of community strengthening which may have an IG element to it, would do well to consider the Ghana SCMP scheme for IG, and carefully examine prevailing conditions and institutions to determine if it can be modified and adapted in order to be implemented in a similar manner.


  1. Providing credit encourages greater accountability and more practical results but requires scarce resources to be used in administering the funds; grants are easier to administer, but do not as easily produce the desired results of sustainability, empowerment, and assurance that the moneys are used for their stated purposes.
  2. In those cultures where the six week "40"-day cycle is important, as among the Akan peoples of West Africa who celebrate the Akwasidae festival every 42 days, the six week cycle is more convenient than a monthly cycle. In Ghana, many of the SuSu groups contributed more often, such as daily (working days). In Kenya, such credit rotation groups are often called "Merry Go Rounds."
  3. Social Animation here refers to several steps in a process, including: awareness raising, community participation promotion, mobilisation of people and resources, sectoral extension work and community management and financial training.
  4. Note that men as such are not excluded from this or any other SCMP initiative, but its emphasis is on affirmative gender activity, to counterbalance the current gender inequities, and the fact that the formation of SuSu groups is usually practised more by women than by men.
  5. The umbrella is an important symbol of authority in southern Ghana, being associated as the identification paraphernalia with the institution of lineage elders and chiefs.
  6. When the scheme was devised, the Minister was asked to sign the Memorandum of Understanding. Understandably, he asked why should these women (many of whom are poor and/or illiterate) would have to make the same sacrifices and go through the same procedures as do commercial applicants for loans, and pay the same level of interest on those loans. After the principles of community strengthening were explained, that SCMP training had a long term aim of sustainable development, the Minister willingly signed the MOU.

Appendix One: Persons Interviewed

Ms Victoria Abankwa,
National Programme Coordinator, Ghana Strengthening Community Management Programme, Ministry of Local Government and Rural Development, Accra, Ghana

Ms Adolphine Asimah,
National Programme Director, Ghana Strengthening Community Management Programme, UNCHS (Habitat), Accra, Ghana

Mr Marcellus Chegge,
Finance and Administration Assistant, CMP Programme, UNCHS (Habitat) HQ, Gigiri, Kenya

Dr Gert L.deking,
CMP Global Coordinator, UNCHS (Habitat) HQ, Gigiri, Kenya

Mr Sigismond S Segbefia
District Liaison Officer, National Mobilization Programme, Asuogyaman District Coordinator, Strengthening Community Management Programme, Ministry of Local Government and Rural Development

Appendix Two: Particulars of the Women's Groups

Community Twifo Heman Nyafoman Akrade Mankron Umbrella Group So Mu Yie Mmo Den Bo Adom Won Suom Translation Hold it Firmly Try/Attempt Grace Hold On Number of Groups 7 7 6 5 No of Individuals 48 39 37 31 Total Savings 265,700 319,100 205,600 93,400 Overall Loan 3,840,000 2,920,000 3,130,000 1,800,000 Date Disbursement 95Nov21 95Nov28 95Nov3 95Nov23
In January 1995, one dollar US was approximately 1,500 cedis.

Remarks: Not inclusive of original 400,000 which is owned by the three women

Assessment for Twifo Hemang was made during November 1995, while the rest were made January 1996. Total savings and loans reflect those dates.

Types of micro enterprises Petty trading is in all communities, but it dominates in Akrade because of its semi urban nature. Other enterprises include soap making, palm oil purifying and marketing, bread making, gari (roasted and powdered cassava) production, and various other profit making enterprises.

Contact Address

Community Management Programme (CMP), Uganda
c/o UNDP, DN/91/UGA/D09
PO Box 7305 (GoU) or Box 7184 (UN),
Kampala, Uganda
Tel: +256-41-243968 (& direct fax) Res: 266987
Fax: +256-41-244801 (UN,Official)
Tlx (UNDP): 61255
FidoNet: 5:7321/1.34

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