Review issue of quack microfinance companies

The Speaker of Parliament, Professor Aaron Mike Oquaye, has tasked the Finance Committee of Parliament to look further into the issue of the microfinance companies that have duped several depositors in the Brong Ahafo Region and other parts of the country.

He particularly asked the committee to consider the engagements that Parliament had with the Bank of Ghana (BoG), regarding the retrieval of money for claimants.

The Speaker gave the order last Tuesday following a statement by the Member of Parliament (MP) for Nkoranza South, Mr Charles Konadu-Yiadom, in which he appealed to Parliament to further probe the incident and ensure the retrieval of the money for depositors.

He said several people in and around his constituency in the Brong Ahafo Region, whose savings were locked up in the microfinance companies, were economically stranded.

The Speaker indicated that he would give further directives and consider the next line of action after the presentation of the report of the Finance Committee.

"It is useful to have this matter further looked into particularly what happened to the interaction between the Bank of Ghana and Parliament so that we have further directives and steps therefrom", he said.

No due diligence

Some of the microfinance companies, prominently DKM and God Is Love, located in the Brong Ahafo Region were closed down by the central bank for operating without the needed authorisation.

Through the intervention of the central bank, some money has been paid to many of the depositors, which they described as very negligible.

Mr Konadu-Yiadom faulted the BoG for failing to do due diligence in ascertaining the backgrounds of the managers of the microfinance companies.

He said the managers exploited the lapses in the regulation system to the disadvantage of their unsuspecting customers.

Mr Konadu-Yiadom asked the BoG to ensure thorough search of the backgrounds of people who wanted to operate microfinance companies.

He said some of the directors of the microfinance companies were walking free and stressed the need for them to be arrested to retrieve the money.

BoG blamed

The Majority Leader, Mr Osei Kyei-Mensah-Bonsu, said the issue of microfinance companies came before the House last year in the Sixth Parliament.

He said the conclusion of the House was that the BoG had been negligent in the performance of its duty.

Mr Kyei-Mensah-Bonsu said when BoG officials came before the House, they admitted that the number of microfinance companies was huge and so it was difficult for them to monitor their activities.

The Majority Leader said the activities of the quack microfinance companies partly affected the stability of the cedi as it became very volatile, yet the BoG was looking elsewhere.

He said Parliament came to the conclusion that the blame should be put at the doorstep of the BoG.

Mr Kyei-Mensah-Bonsu suggested that the BoG be invited to Parliament to inform the House about where they were in the pursuit of the claims that existed and what measures the central bank had put in place to pay back the claims.

New regulator

The Deputy Minority Leader, Mr James Avedzi, said during Parliament's engagement with the BoG, MPs made it clear that the number of microfinance companies was too big for the central bank to manage.

He said the legislators stressed the need for the BoG to stop issuing new licences to microfinance companies.

Mr Avedzi said the proposal was that the government should consider having a separate body that would be the regulator for the non-financial institutions.