BoG urged to support MFIs

The Bank of Ghana (BOG) has been urged to support the growth of micro-finance institutions (MFIs) in the country by intensifying supervision and training programmes for operators in the sector.

“They should increase their supervision, make sure that sanity prevails in the system, and then the public will have more confidence in us [MFIs]. Notably, we have a lot of Ghanaians who don’t save with banks, so when the regulator is able to convince the public, there will be more confidence and the clientele base of the MFIs will grow,” Bright Mark Kelly, the Chief Executive Officer of BIK Micro Finance Company Limited, told B&FT in an interview.

“When more people do business with the MFIs, the MFIs will be empowered, and they will in turn be able to empower SMEs and the underserved in society.”

SMEs make up 90 percent of all enterprises in sub-Saharan Africa, of which about 70 percent are micro and small enterprises. The sector is the second-largest provider of jobs and income after subsistence farming.

However, in most Africa countries, the sector contributes less than 20 percent to Gross Domestic Product (GDP) whereas in developed countries they contribute 60 percent. In Ghana, the sector employs about 60 percent of the overall workforce, yet contributes only about 6% to GDP.

MFIs are currently required to have minimum equity of GH¢100,000 compared to saving and loans equity of GH¢7million and bank equity of GH¢60 million.

High interest rates and access to short- to medium-term credit are some of the constraints facing the private sector in the country. While the private sector -- of which SMEs form a chunk -- has been touted as the engine of growth, some contend that it has not received the needed support to thrive.

The Association of Microfinance Companies (GAMC) has therefore indicated that it will soon establish an investment vehicle to source funds for its members. The initiative is to ensure that funds are readily available for on-lending to members of the association, and to strengthen the operations of micro-finance institutions in the country.

Mr. Paul Aheto, Deputy Executive Secretary, in an interview with the B&FT indicated that a Client Information and Complaint System (CICS) has been established by the Association as a system of redress for poor services rendered them by member-companies.