‘Tighten access to financial market’

The central bank must strengthen the barrier to entry for new entrants into the financial market as the sector is currently “too crowded”, Ismael Kwesi Otchere, a microfinance expert and general manager of Microfin Rural Bank has advised.

He told the B&FT in an interview that access to the financial market has been loosened to new entrants in the quest to boost financial inclusion and facilitate a vibrant fiscal market, but that is not the way to go.

Mr. Otchere said: “There are too many banks in the country for a population that hovers around 27 million. As it stands, the financial market is crowded and there is a need for certain controls; and that includes tightening the entry barriers”.

There are currently about 676 financial institutions in the country comprising universal banks, non-bank financial institutions, microfinance companies and rural and community banks.

But the seasoned banker said: “We don’t need so many banks to have a strong financial market or to achieve financial inclusion.

“Financial inclusion is rather about having a controlled number of banks that will be able to develop strategic products to meet the demands of businesses and individuals at the micro-economic level.”

Mr. Otchere’s views reflect that of the business community, specifically budding entrepreneurs and owners of small and medium enterprises who continue to mention the general lack of access to credit as the key factor militating against growth and expansion of their businesses.

Access to credit and cost of credit are among the top-five albatrosses hanging on the necks of businesses in the country according to the AGI’s Business Barometer, a report that collates the key challenges faced by chieftains of industry within a specific period of time.

Mr. Otchere further argued that controlling the number of players in the financial market will aid the regulator to effectively monitor and supervise activities in the sector.

He commended the Bank of Ghana on its decision to raise the minimum capital of banks to GH¢120million, as it will help industry players to resist volatility and also make them resilient to current market volatilities.

The financial expert also called on the industry regulator to iron-out the systemic challenges facing the sector; such as the widening Treasury bill rates, high inflation and the volatile cedi.