Abstract This paper examines the extent to which microfinance has contributed to poverty reduction in Ghana by supporting their clients with both financial and non-financial services to build up their asset base. The study found that participation in the programme has enabled established clients to own savings deposits and subscribe to a client welfare scheme to pay off debts in times of illness or death. They were also found to be in a better position to contribute towards the education of their children, payment of health care for members of their households and the purchase of household durables. The study further noted that clients who remained in microfi- nance programmes for long periods of time suffered from diminishing marginal returns. There should be some form of up-scaling to accommodate these clients or they should be able to join other financial service providers in the formal sector in order to benefit fully from a participa- tion in microfinance programmes. Keywords: microfinance, asset building, poverty reduction, financial sustainability, Sub-Saharan Africa, Ghana 1. INTRODUCTION This study links three key issues of microfinance, asset building and poverty reduction. Given the immense recognition and acceptance of micro- finance by governments, development partners and non-governmental or- ganizations (NGOs) as an interventionist strategy towards poverty reduction in developing countries, an evaluation of the effects of microfinance pro- grammes on poverty reduction through asset building is deemed to be a use- 265 1 We would like to express our gratitude to the management and members of staff of Sinapi Aba Trust (SAT) as well as the clients of SAT, especially those served by the Agona Swedru, Offinso and Tamale branches for their co-operation in the survey conducted for this paper. ASSET BUILDING AND POVERTY REDUCTION IN GHANA: THE CASE OF MICROFINANCE 1 JOSEPH ADJEI, THANKOM ARUN and FARHAD HOSSAIN