Ghana: BoG Wild Over Microfinance
The Bank of Ghana (BoG) has expressed worry over the proliferation of microfinance institutions in the country.
However, some observers have described the establishment of the microfinance institutions in the country as encouraging since they seek to satisfy the needs of the unbanked in society.
The BoG is unhappy with activities of some operators who defraud unsuspecting members of the public.
On the sidelines of the Financial Literacy Week celebration in Accra recently, the Governor of the Bank of Ghana, Paa Kwesi Amissah Arthur, advised the public to desist from dealing with unlicensed microfinance institutions, adding, “Anyone who deals with such institutions does so at his or her own risk.”
He observed that the rate of growth of the sub-sector had brought to the fore the urgent need to strengthen regulations and supervision of their activities in order to streamline their operations.
This, he said, would make the microfinance institutions more relevant to the process of achieving financial inclusion of the less privileged and enhance poverty reduction.
To address this problem, he said the Central Bank had adopted various measures including the establishment of microfinance units within its Banking Supervision Department, among others.
“Steps are being taken to build the requisite capacity to take up the challenge of supervising and regulating the microfinance institutions.”
The Central Bank, he noted, had issued new operating rules and licensing guidelines for microfinance institutions mainly aimed at regulating the operations of players in the sub-sector.
The guidelines generally provides details of the various categories of institutions in the microfinance sub sector-the business forms, capital requirement, branch expansion and permissible activities.
Additionally, the bank is actively involved in organizing stakeholders’ workshops for microfinance institutions to build the need capacity to enhance their operations.
To ensure sanity in the microfinance sub-sector, there are plans to assist the apex bodies to complement efforts of the Central Bank in supervising the activities of the constituent institutions.
“We will constantly dialogue with operators in the industry on the strategic and operational issues with the view to ensuing that our model of microfinance becomes a point of reference globally.”
By Emelia Ennin Abbey, Business Guide Ghana