Microfinance sector under scrutiny as NGOs push for tiered regulation

Financial NGOs in Ghana are calling for a tiered supervisory framework in the microfinance sector, arguing that current regulations fail to reflect the diverse capacities of industry players.

Speaking at the 8th Annual General Meeting and Symposium of the Ghana Association of Financial NGOs (GHASSFIN) on September 4, 2025, National Chairman Spencer Badu stressed that while the existing minimum capital requirement of GH¢300,000 remains relevant, a one-size-fits-all approach places undue burdens on smaller institutions.

“We are not asking for a review of the GH¢300,000 requirement—it has served us well for years. What we are proposing is a tiered system, where the Bank of Ghana retains oversight but works with the Association to monitor institutions. This way, regulation can match the actual capacities of operators,” Badu explained.

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He further urged the Central Bank to collaborate more closely with GHASSFIN in monitoring members’ activities, while renewing calls for government to fast-track the long-delayed national microfinance policy.

“The policy was nearly ready a few years ago but stalled. Ideally, policy should have guided regulation, but in our case, regulation came first. We hope the current government will finalise it within the next four years,” he added.

GHASSFIN maintains that a flexible regulatory structure, backed by a dedicated policy framework, is critical to ensuring sustainability and expanding financial inclusion, particularly in rural areas.

Badu also highlighted the risks associated with lending to the agriculture sector, where credit recovery is increasingly undermined by climate change.

He emphasised the need for tools such as crop insurance to cushion institutions and strengthen resilience.

Delivering the keynote address, Rural and Microfinance Consultant Dr David Andah cautioned that financial NGOs risk being overwhelmed by rising operational costs and external shocks if innovation and targeted policy support are not prioritised.

“The critical question is whether you are financing resilience or financing vulnerabilities. We must also confront the effects of climate change on our balance sheets,” he warned.

SP/MA

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