Asaga calls for strengthening of micro finance institutions

Accra (Greater Accra) 16 Feb.'99

Government is actively collaborating with the Micro Finance Institutions Action Research Network and other stakeholders to develop and strengthen the sector to enable it to complement the efforts of the traditional banking sector.

Mr Moses Asaga, Deputy Minister of Finance, noted that poverty is a long-term problem and called for an institutional framework with a long-term objective to address it.

At the opening of a three-day West Africa Regional Workshop on Micro Finance in Accra today, under the theme : "Capacity Building for Micro Finance Networks In Africa - Sharing Our Experiences", Mr Asaga said the increasing level of activity in the sector emphasises the government's commitment to work with stakeholders to fully develop the sector.

It also shows that government recognises the sector as a strategic tool for poverty alleviation.

Mr Asaga said the sector has seen wide ranging reforms which have resulted in significant liberalisation of the economy.

"We have sought to rationalise and re-structure the financial systems to ensure that it can continue to deliver effective and efficient services to all Ghanaians".

The Ministry of Finance has committed over 100 million cedis to support the development of a comprehensive Innovations and Capacity Building Fund for micro finance institutions.

"Other institutions like the Association of Rural Banks and Credit Union Association are also being strengthened. The role of government is to co-operate with donors ... to facilitate a process to harness ... the development of the industry".

Mr Asaga commended the Metropolitan and Allied Bank for its innovation in enhancing the development of the susu system and urged other banks and similar operators to support the idea.

Micro Finance Institutions (MFIs) are non-bank financial institutions that provide finance to small- and medium-scale entrepreneurs.

The workshop, organised by the Ghana Network, is being attended by 65 managers and directors of micro- finance institutions from Ghana, Nigeria, Benin, Niger, Burkina Faso, Cameroon and Kenya with funding from the World Bank.

The rest are Cote d' Ivoire, Guinea, Togo, Senegal, Mali and South Africa.

The Net work has the objective of developing data and sharing of information on micro finance industry, sharing emerging lessons from micro finance institutions operating locally and abroad. It also facilitates institutional capacity building of members, researching and developing micro- finance products.

The micro finance sector serves up to 80 per cent of the economically active population.

Ms Shimwaaye Muntemba, an official of Action Research Programme of the World Bank, suggested the expansion of national networks at the next phase of development to enable them to participate meaningfully in global financial initiatives.

She said micro finance institutions exist for poor clients and urged them to make the poor their target.

Ms Muntemba said networking in this area will involve challenges but called for resoluteness in approach adding that "... in the long run the benefits might well outweigh the short-term apparent difficulties. The meaningful challenge is how to turn difficulties around into benefits".

The workshop will receive country reports and share experiences encountered by MFIs.