Abstract:
The growing visibility of informal activities in urban centres is one of the striking
phenomena characterizing the space economy of cities of the developing world
including Kumasi in Ghana. Closely associated with this phenomenon is the
emergence of a variety of Microfinance Institutions (MFIs) responding to the
financial needs of these micro and small informal operators who are unable to
access the formal financial market. Through innovative product development, these
microfinance institutions render very useful financial services to the informal sector
as a result of the increased demand for their services. With time the operations of
these MFIs have shown that the answer to the issues of under-employment, lowproductivity,
extreme poverty and other challenges confronting the informal sector
lies in making financial services, particularly credit, available to the operators in
the sector. This chapter examines the dynamic relationships between the informal
economy and the delivery of microfinance services by MFIs operating in Kumasi.
It further examines the size and growth of the interactions, key players in the
transactions as well as the challenges and how they could be remedied through
appropriate policy interventions.
