An Analysis of Microfinance Credit's Impact on MSMEs' Performance in The Gambia

Abstract

This thesis investigates the impact of microfinance credit on the performance of Micro, Small, and Medium Enterprises (MSMEs) in the Greater Banjul Area (GBA) of The Gambia, a critical area for economic growth and poverty alleviation in developing countries. Focusing on a quantitative analysis, the research primarily utilizes data collected from questionnaires administered to owners and managers of MSMEs. This study aims to fill the gap in understanding the specific outcomes of microfinance services on the operational and growth aspects of MSMEs in this region.

The research framework is structured around examining various dimensions of financial performance, including but not limited to revenue growth, profitability, and investment capacity, in correlation with the access to and use of microfinance credit. Additionally, the study considers the role of entrepreneurial orientation as a mediating factor in the relationship between microfinance and performance, alongside evaluating the impact of credit factors such as loan amount, repayment terms, interest rates, and collateral requirements.

Preliminary findings suggest that microfinance credit plays a significant role in enhancing the financial health and operational stability of MSMEs in the GBA, potentially leading to increased economic activity and job creation in the area. However, the study also acknowledges the complexity of this relationship, influenced by factors such as the nature of the business, the management capacity of the entrepreneurs, and the specific terms of the microfinance products available.

The final analysis will incorporate a descriptive and inferential statistical examination of the data collected, with the aim of providing robust evidence on the efficacy of microfinance credit as a tool for economic development and empowerment of MSMEs in The Gambia. Policy recommendations and strategic insights will be proposed, aiming to optimize the delivery and impact of microfinance services in fostering the growth and sustainability of MSMEs in developing contexts. This thesis aspires to contribute valuable knowledge and practical recommendations to stakeholders involved in the microfinance sector, including policymakers, financial institutions, and entrepreneurs, towards maximizing the benefits of microfinance for economic advancement in The Gambia.