The low interest rate that some microfinance companies purport to charge, sometimes as little as five or eight per cent, is a calculated gimmick that has caused many unsuspecting clients more harm than good, Economic Tribune has established.
This is contrary to the wishes of the World Bank and other donor agencies that lend billions of dollars to enable microfinance service providers dish out soft economic empowerment loans.
Some clients of microfinance companies interviewed regretted joining the microfinance schemes, saying what had at first seemed a good prospect of extricating themselves from abject poverty, ended in misery after losing valuable property.
Economic Tribune’s investigative team that set out on a one-week mission into the world of microfinance concluded that most of the highly-publicized soft terms that lured many people into joining the schemes are cosmetic. The team visited a number of such institutions and interviewed a number of clients.
Customers interviewed by our investigative team talked of several hidden costs that when finally computed made them pay more than what they bargained for. They also talked about constant harassment by officials from the microfinance companies on the event of failing to honour their repayment schedules.
Microfinance companies such as Beige Capital and Oak Financial Services are for instance charging their customers an interest rate of 4.5 per cent and three per cent respectively excluding processing fees and other hidden costs.
“Most of the microfinance companies are just in the country to rip us off. Can’t you see everybody wants to set up one? I have fallen victim to one of them and my valuable assets have been confiscated. I couldn’t finish repaying the loan because of the hidden cost,” Mr Daniel Kutor, a civil servant lamented.
Economic Tribune came across rooms full of various electronic items, including TV and radio sets, refrigerators, music systems, sewing machines and beds and mattresses that have been confiscated from clients who were unable to pay on time.
The story of Mr Kutor was not different from the other Ghanaians who patronize the services of microfinance companies. There is a sad story of a widow who borrowed money from one of the microfinance companies (name withheld) to carry on with her dead husband’s project only to find she could not repay the eight per cent monthly interest imposed by her lenders above the five per cent initially agreed upon.
“My brother, I have regretted taking the loan from this company,” the widow, Eva Asiedu, lamented.
Low-income earners and the poor are not the only victims. Well-to-do business people are crying foul as well. Most of them have lost their property, including posh vehicles, after being lured to the loan schemes that promised ‘heavens’ in terms of affordable and low interest rates, only to end up being charged exorbitant interest rates.
When reached for comment, Mr Steve Andrea, a financial expert with JP Financial Consult in the US, told Economic Tribune that microfinance companies cash in on financial management ignorance among borrowers who seemed not to have taken their time to study the loan terms.
“Borrowers are undoubtedly lured by money lenders who talk sweetly to them, setting low interest rates of between five and eight per cent. No one remembers that five per cent a month is equivalent to 60 per cent annually,” Mr Andrea pointed out.
“I am aware that some people are undergoing a life of deep misery after borrowing money that they could not afford to repay due to the exorbitantly high interest rates. This is rather absurd,” he noted.
Asked why Microfinance companies attach people’s property to the deals, a CEO of one of Microfinance institutions, who pleaded anonymity said previous experience has taught them ‘a lesson’.
“Initially, we accepted vehicle cards and land title deeds but some untrustworthy clients sold their property, changed ownership documents and disappeared. Under such circumstances, we had no other option but to attach property,” he concluded.
Mayada El-Zoghbi, Senior Microfinance Specialist at CGAP said international funding for microfinance reached at least $25 billion in 2011. The total amount committed has increased over the past five years, though at a slower rate in the last two years.
From Vibe Ghana
Microfinance, providing financial services to low-income clients, has gained popularity in Ghana in the past 20 years and has played an important role in helping the poor – especially women – improve their lives. And the number of lenders providing small, short-term loans has multiplied. Many people in Ghana have a positive view of the easy access to loans that micro credit provides. But there is also concern that without better regulation, some microfinanciers can exploit customers who need such services the most.
Microfinance companies are classified as non-bank financial institutions by the Central Bank of Ghana. Under current regulations, they can mobilize capital by accepting deposits from individuals and small business ventures. They can also give short-term loans to their customers.
One such customer is Marian Kyei, a housewife with two children. She says these companies, also known as Savings and Loans Companies, offer a vital lifeline to her and other Ghanaians.
“I need a loan; I get it in 48 hours,” she said. “You want a loan from a traditional [bank] you have to bring collateral, guarantors; you’ve got to bring all kinds of sureties. So when these companies came up, people jumped on board.”
The Bank of Ghana says that growth in micro lenders is significant, from 12 such companies in 2006 to 19 in just five years.
Liberalizing regulations has allowed this industry to grow with the need. But some here worry that without tighter oversight, fraudulent practices could increase and poor borrowers could be exploited.
Kyei says she would like to see the central bank do more than just grant licenses to micro lenders.
“I have not seen the Bank of Ghana come up with warnings to alert the public, who access these loans, to look out for specific things that will ensure that their monies are safe,” she said. “Most of these businesses ask for advance cash before they can give loans. You look at the terms, it’s almost like a loan shark (fraudulent lender). Also, when people are unable to pay, what are the regulations that are in place to pay? Because like loan sharks, when people don’t pay they go through all kinds of means to get their monies back. ”
Kyei suggests the Central Bank could periodically publish names of businesses that are reputable.
Kofi Asare, a Ghanaian salaried worker, is also concerned about what he says are very high interest rates charged by microfinance companies.
“Most of them have compound interest, charging up to 10 percent every month,” he said. “You can only make that much if you are doing buying and selling. But the over emphasis on buying and selling is not doing our economy any good. If those people continue that way, you encourage importation at the expense of production.”
But a microfinance manager in Accra, who asked to remain anonymous, defends his industry as good for small business and good for Ghana’s development.
“I come from a financial institution which has a very competitive interest rate. Initially, we were charging 4 percent and over [monthly] but now, it has come down to 3.5,” he said.
He says in addition, his company also gives business advice to people taking out loans to help them use the money successfully.
The government of Ghana has adopted microfinance as one of its strategies for reducing poverty. And most economic indicators suggest it is helping. VOA
From Joy Online
Mr Ben Fankah, Executive Director of Africa Financial Services (AFS), has expressed the need for micro-finance companies to set up educational units in their outfits to tutor prospective clients about the facilities they offer.
This, he said, would prevent situations where many clients get disappointed after taking loans from micro finance companies, coupled with difficulties with repayment plans and huge interest rates.
Speaking in an interview with the Ghana News Agency, Mr Fankah noted that the products offered by micro-finance and non banking institutions are “need products” and not “want products”, hence the need for a thorough understanding by clients before they are given the facilities.
“Most clients come with dire financial needs and are mostly desperate to access financial assistance.
“Because of this, they do not weigh the facility well by looking at the advantages and disadvantages of the loan before completing and accepting the terms and conditions”. He stated.
He said most clients end up unhappy after accessing the loans because they were not well educated on the facility.
Mr Fankah, a long time player in the micro finance and non banking financial service industry started at Bayport Financial Services as Marketing and Public Relations Manager from 2006 to 2008, before moving to Dalex Financial Services as a Senior Manager in Charge of Operations from 2008 to 2009.
From Joy Online
The microfinance fever is catching on very fast in Ghana. There are Microfinance Institutions (MFIs) on major streets in Accra. It is now common to see offices that have inscriptions which presuppose that these enterprises are into the provision of microfinance services. These firms mainly provide loans or and mobile banking which is commonly know as susu.
The increasing number of MFIs whether a registered susu agent or an on-lending MFI is an encouraging phenomenon for the Ghanaian microfinance industry. At least the increasing number of these MFIs will provide the end users (low income earners and the poor) alternative services and products to choose from when it comes to their financial needs. The increasing number of MFIs will also break the cycle of monopoly and contribute to a more competitive industry that will provide products and services that will meet the financial and non-financial needs of the poor and the low income earners. The growth in terms of numbers (setting up on new MFIs) is expected to improve the accessibility of financial services to the large non-banked population in Ghana and, thereby, lead to an improvement in the services and products being offered to the informal sector or market.
The increase in the number of MFIs in Ghana can be attributed to the successes that have been recorded by some MFIs in Kenya, Ethiopia and Uganda as well as the world wide acknowledgement and recognition that has been given to microfinance by international donors and governments. In addition the proven fact that the low income earners and the productive poor can improve their livelihood through the provision of credit is influencing many more entrepreneurs’ to invest in microfinance. For others, it is purely for commercial purposes and for others; it is a mixture of the two. This is to say that incentives and rewards play a vital role in attracting financial and non financial service providers to consider serving the poor and the low income earners.
SUSU demystifying banking in Ghana
A study conducted by CGAP indicated that half of the people who are not banked and not extremely poor in Zambia do not open an account because the nearest bank branch is too far. Other studies have also supported the fact that physical distance is often cited in household surveys as a reason for not opening a bank account. The situation is not so different from what is happening in Ghana. The susu saving scheme (“mobile banking”) have provided a bridge by taking banking to the doorsteps of its clients. It is evident that susu operations in Ghana has contributed to the mobilization of excess monies from the informal sector into the main banking stream. Through the susu operations, it has been demonstrated that most Ghanaians can improve on their savings culture if access to “deposit centers” were not a problem. This is supported by the number of people who consistently save with trusted susu operators within their localities. The success of this system has influenced some traditional banks to adopt the susu banking scheme’s to improve on their deposit mobilizations activities. Another interesting development in the susu industry is that , the profile of most of their clients which in time past were mainly made of traders, farmers, hair dressers, mechanics (fitters) etc, is gradually changing to include some clients in the formal sectors of the economy . These developments tend to suggest the wider acceptance of the susu system among many Ghanaians irrespective of the presence of some charlatans in the business. The acceptance of the susu schemes has motivated several individuals and entities to set up their own susu firms. The achievement of the susu schemes tend to supports the fact that given a convenient means (accessibility) most Ghanaians can cultivate the habit of savings. This conclusion can be deduced from the increasing number of people who are signing onto susu products that even do not offer any interest rates on the amount saved.
The informal market and their need for financial services
Clients in the informal sector have developed confidence for MFIs aiming to provide financial service to the people in the informal sector of the economy either by making loans or deposits products available. This is a demonstration of the potential desire of the under-banked and non-banked population to have access to funds and other financial services to improve their livelihood by investing in economic opportunities. This desire for financial services has even resulted in instances where self styled MFIs abscond with the savings of the clients. It is interesting to note that although trust in a financial system is a precondition for individuals to give their money to banks or MFIs, the demand for financial services is increasing even in situation where some MFIs have absconded with clients’ savings. The trust demonstrated by clients even for clients who have had their savings lost through the activities of fake MFIs is still soaring high and quite a number of these clients still maintain some relationship with an MFI. This scenario is different for some countries. For example in the Russian Federation, Ukraine, and other Eastern European countries, it took years before people returned to banks after losing their life’s savings to high inflation and bank collapses in the 1990s (CGAP 2009). However, the larger part of the informal market in Ghana do not take a long time for them to renew their trust for new MFIs after a negative experience with another MFI.
The peculiar characteristics of the informal market and their increasing desire for financial services and products are an indication that there is a huge market for microfinance in Ghana. But to serve this market on a sustainable basis, and grow entrepreneurs behind MFIs should endeavor to know that microfinance goes beyond the granting of loans and the collection of daily savings. These MFIs must start thinking about sustainability. They must begin to identify the main challenges that will hinder their operations and, thereby, affect their sustainability.
Like any other business, doing microfinance business successfully requires paying attention to certain key issues which may be peculiar to the industry. These important factors may include:
• Understanding the profile of the low income earner
• Gender sensitivity
• Staff hiring
• Building volumes (number of clients, number of borrowers)
• Keeping loan repayment rates high
• Retaining customers (active savers and active borrowers)
• Minimizing scope for fraud in branches
Understanding the profile of the low income earner
Microfinance is a not just a social program. It is a business that should be learned if it is to function sustainably. A lot of the people behind most of the pro- poor “banks” or MFIs do not think doing microfinance business requires any specialized skill and that the conservative banking techniques will work when dealing in microfinance. MFIs providing financial services to the poor should consider the complex nature involved in offering services to the poor in order to ensure a better return on their investments and to achieve some level of impact for their contribution to eradicating poverty. Doing microfinance can be costly because of the small size of loans and deposits. This, therefore, calls for appropriate methodologies and strategies that can minimize the operational cost as well as strategies to increase staff productivity or efficiency in order to be sustainable.
It is important that MFIs acquire adequate knowledge of the market they are serving. This will assist them in designing efficient strategy to serve their client better. For instance the market of the micro clients are principally characterized by low literacy levels, low financial literacy levels, short term economic activities (buying and selling, crop farming, etc),high social capital (trust) and low or absence of adequate collateral amongst others. The usual type of collateral required by traditional banks does not exit. In the absence of the traditional collateral, there is the need to device new risk management strategies to keep clients committed to paying off all the loans granted them. This background contributed to the group loan methodologies which have been used by several MFIs across the world. However, the chosen credit methodology should be adopted to fit the operational area of the MFI.
Purely microfinance concepts have over the years targeted women and this formed the heart of the microfinance system. Statistical evidences indicate that the majority of the customers of MFIs are women. Some MFIs, like Crecer in Bolivia and Kashf in Pakistan, lend exclusively to women. Several research works indicate that women have better repayment behaviour compared to their male counterparts. These findings arose through a process of experimentation in the late 1970s at what became the Grameen Bank, as the institution discovered that women were easier to work with than men in rural Bangladesh.
From this background MFIs doing business in Ghana cannot reinvent the wheels and will have to acknowledge that women clients can be a booster for the growth of their enterprises. MFIs should, therefore, make an effort to understand how poor women earn, save and invest money in order to guide them to design products and services that can meet the needs of the women client.
Minimizing scope for fraud
For MFIs that operates small branches which are physically linked by weak transportation and communications infrastructure or susu operators that have several field staff, monitoring branch activities or filed officers activities to prevent internal fraud is a major challenge. This challenge has resulted in several fraud cases where field officers under record the actual deposits or repayments of their clients. MFIs with such challenges should not gloss over them. At least supervisors and managers of such MFIs should undertake random visits with their field officers to interact with some of its clients and to verify their deposits in the case of susu clients and the repayment of loans. These challenges can also be reduced if the MFI practice good booking practice which has been identified as one of the major weakness in most MFIs.
Most MFIs have been conscious of reducing their staff cost to ensure that they become profitable. This has resulted in MFIs having to deal with high staff turnovers as a result of low paid salaries. Staff packages in place at most MFIs have resulted in the industries inability to attract highly qualified staff and ,therefore , most of the MFIs have settled for staff with average qualifications. It is, however, important for MFIs to ensure that any calibers of staff employed are provided with adequate training. This will not only help them serve their special clients better but they will become efficient individual lenders as they improve on their turn around time.
One key thing to keep in mind when recruiting MFI staff is that they we will be required to make independent judgment especially on the part of loan officers. These workers would assess the quality of the information given by the client, which cannot be taken at face value even when supported by financial statements which in most cases are absent. Good individual loan officers will also be required to develop indirect techniques for getting at the truth, such as asking borrowers about both the value and volume of their sales in order to see whether the implied price is realistic. They should be able to deduce a lot of information about a retailer’s business by scanning the merchandise on the shelves: Are the shelves empty or full, the products new or old? All these require a habit of critical thinking which can be found in staff with appreciable level of educational qualification. The MF industry should therefore, develop an attractive incentive package systems to enable it to attract well qualified staff to support its sustainability strategy.
The presence of MFIs in Ghana would not be felt; that is their contribution to raising the income levels of the low income and the productive poor through the provision of loans and other services will not be felt if the basic requirements needed to grow the microfinance business are not employed.
As more and more MFI springs up in Ghana, regulatory bodies concern should act to support the activities of these firms and also to protect the clients dealing with these institutions so that in the wake of the “microfinance revolution” authorities and the poor will not be caught on aware.
By Roderick Okoampah Ayeh
Microfinance Technical Officer
ARB Apex Bank Limited
By Masahudu Ankiilu Kunateh, Ghanadot.com
The microfinance sector in Ghana is at the verge of collapse. This is due largely to the refusal of beneficiaries of some microcredit schemes including the Microfinance and Small Loans Centre (MASLOC) to pay loans owed the sector.
In addition, the sector is being hampered by political interference in which loans are awarded to party faithful instead of capacity, and creditworthiness of awardees. MASLOC is a culprit of this heinous canker.
MASLOC which is a microfinance apex body responsible for implementing the Government of Ghana’s (GoG) microfinance programmes targeted at reducing poverty, creating jobs and wealth.
Though over the years MASLOC has modestly established itself not only as a microfinance institution that disburses micro and small loans to the identified poor in the various sectors of the Ghanaian economy, but also provides business advisory services, training and capacity building for small and medium scale enterprises (SMEs) as well as collaborating institutions, to provide them with the required skills and knowledge in managing their businesses efficiently and effectively. Every beneficiary of the centre is expected to pay back the loan ranging from six months to seven years depending on the size of the loan.
Unfortunately, since its establishment in 2006, it has not been able to live up to the dreams and aspirations of the government and people of Ghana.
The Chief Executive Officer (CEO) of MASLOC, Bertha Ansah-Djan reveals that centre is currently has no money to give to players of the small scale sector of the Ghanaian economy.
She adds that over GH¢80 million is being owed by some beneficiaries of the scheme for the past two years. These include taxi drivers, farmers, market traders, animal husbandries, and vegetable farmers.
Under the micro-finance and small loans scheme, about 300 new VW Parrati taxi cabs, worth more than GH¢15,000 each in 2007, were distributed to beneficiaries across the country to operate transport services and pay in monthly instalments. But many of those beneficiaries, including those on the taxi scheme, are currently not on the radar of the centre’s recovery plan.
This and other unregulated spending of poverty-related funds and improper appraisal of projects before disbursement of funds are threatening to cripple the otherwise viable programme, which is meant to remove the financial bottlenecks of SMEs.
A senior economist, Abdul Salam Rahamani noted that unregulated granting of poverty related funds at the centre, improper appraisal of projects before granting of facilities, granting of huge sums of loans to the managers of the fund and low recovering rate for the facilities extended to clients have virtually made the fund to go bankrupt.
Since the assumption of office of the Mills-led government (2009 to date) , the centre has not been able to disburse any fund to any individual(s), and group(s). What officials at the centre are busily doing is to recover the mountain debt. Their efforts of recovering the state funds from the defaulters are being hindered by the usual lack of data. They also fear that it will lead to political vendetta. Because, members of the opposition New Patriotic Party (NPP) which initiated the programme will say that their men are being harassed by the present government, according to some officials of the sector.
Although, most Ghanaians would not like to believe that because of the so-called political vendetta surrounding the recovering of the debt, the government should not go all out to recover the tax-payer’s money from these selfish Ghanaians.
Some beneficiaries of the centre say the loans they got from the centre were put into their businesses. But they could not make profit to pay back the centre. A visit to Dodowa, about 25 kilometres from Accra, to speak to some beneficiaries of the centre who are investing their money into poultry farming, found that these borrowers were prepared to pay for the loan.
But, Nii Lartey, the manager of the farm pleaded with the centre, saying “we are yet to make profit from the loan”, and also called for extension of the expiry date of the loan (next month). When quizzed whether he will pay the loan to the centre, Nii Larty said it depends on the market dynamics. “If the market is fine I will pay but if it is not fine, I will also behave like the thousands of others who refused to pay”.
Another beneficiary, 31year-old taxi driver said he used the loan to purchase a passenger bus, but unfortunately the bus crashed completely in an accident. “So, am not prepare to pay for the bus which crashed”.
However, the CEO of the centre cautioned them to pay the loans or face court, revealing that: “We are engaging the Bureau of the National Investigations (BNI) and Criminal Investigations Department (CID) of the Ghana Police Service to retrieve the loans”.
Microcredit facilities in some countries like India, Indonesia and Malaysia have contributed tremendously to the reduction of poverty. But in our part of the Ghana, little can be said about its impact.
By Jennifer Fierberg, MSW -
Too few people in the developed world have heard the term Microfinance. Microfinance projects in developing countries provide sustainable financial opportunities for women, children and families living in dire situations. These loans are typically less than $100 and offer an individual the opportunity to start their own business and provide for themselves and their families in ways they never have before. The majority of Microfinance loan recipients are women and live in impoverished areas of the world.
One organization in Ghana, Africa is creating such opportunities for the women of their community. Volunteer Partnerships for West Africa (VPWA) has just celebrated the one year anniversary of their Microfinance program. Their most recent newsletter stated “The small loans and subsequent training provided by VPWA Microfinance help entrepreneurial women to launch or expand upon a small business and gain a regular income. This economic activity enables women to provide for their household, send their children to school, and minimize dependence on their husbands. VPWA Microfinance loans have fair terms and we pride ourselves on the strength of the relationships we have developed with our recipients.”
In this first year of the program VPWA secured 80 loans for the women of Ghana. The total amount loaned of GHC GHC11,126 or $8,192. The total amount repaid within the first year stands at 99.5%. The women have developed numerous business plans including the purchasing of a refrigerator to sell cold drinks, opening general supply stores, sewing and one woman put her loan directly back into the community by purchasing cement to build additional classrooms for a local school with the assistance of the community. The new classrooms have benefited the children of the Greater Accra region through increasing access to literacy and educational programs.
The Microfinance program not only provides the women with financial assistance but with an all-volunteer base VPWA is able to provide training to the recipients in business planning, accounting and management of resources.
In 2011 VPWA seeks to grow their program through increased loan participation to more women, provide further literacy programs to the community with a focus on financial education as well as seeking to further financial stability to the women of Greater Accra region of Ghana.
Self-sufficiency for a woman not only provide for herself and her family but for the generations that will follow her.
How can you help! Take action by donating to the program at www.vpwa.org Your donation will not only finance a business for a woman but will provide for generations to come.
By: Jennifer Fierberg, MSW
All over the world, people suffer from poverty and abuse on a regular basis; founder of WomensTrust Dana Dakin seeks to rectify these problems in Ghana through microfinance lending. Ghana’s education system cannot keep kids in school, and when kids drop out, they continue a vicious cycle of poverty. Dana Dakin has taken measures to put a rock in the cogs of poverty and improve life for women in Ghana. At the age of 60, Dakin founded the WomensTrust organization, which seeks to help women in stabilized communities by helping grow their companies through microfinance lending. Rather than simply giving a developing country like Ghana money, the organization gives the people tools to use the money they have. WomensTrust is currently working with the Pokuase Village in Ghana, where they educate women of all ages in microfinance, but also aim to increase education and healthcare.
On Tuesday, Dana Dakin spoke to a group of BU students at the Women’s Resource Center about her involvement in WomensTrust. Dakin said she had learned growing up that life was split into three distinct, chronological phases: first learning, then earning, and lastly. returning. As indicated by her work in WomensTrust, Dakin sees herself in the third phase.
The goal of WomensTrust is to “use microfinance along with education and health care to improve life for women in Africa,” said Dakin. By making the organization community based, it is easy to integrate, and use resources which many large companies frequently ignore: the very business people already in place in a particular community. WomensTrust works with women who have established businesses in Pokuase so that they can expand them.
Business in a village like Pokuase is far different than what the Western world would traditionally consider. Gertrude Ankrah, the program director of WomensTrust, explained that a woman’s business in Ghana is about selling anything possible. From water to food to fabrics, the women begin at the bottom, carrying their goods on their heads, going to the buyers, and working their way up. With the loans they can take out from WomensTrust, women are able to expand their businesses from being carried around to a stationary table, and eventually a kiosk, meaning that customers come to them, rather than the other way around.
Ankrah, who was born and raised in Pokuase and still lives there today, explained that the people of Ghana live day to day, just attempting to survive and earn enough money to feed their families. When a woman is trying to go out and find food for her family, long-term business goals simply can’t be a priority for her. WomensTrust is trying to change that, so women no longer have to live day to day, in fear of not having food or health care for their families, or afraid that their husbands will beat them for not helping to provide for the family.
In order to help women, WomensTrust is not only providing low interest rate loans to the women of Pokuase, but also educating them and forming a support system. The women who are eligible for the loans meet frequently with one another to share business ideas and tips. They also must form a group with three other women in order to apply for a loan. The idea is that the women will receive their individual loans, but cannot receive another larger loan until each individual in the group has paid her share back. This way, WomensTrust encourages not only the growth and success of business, but the building of relationships as well. Dakin’s idea is to make a model that community based and replicable, so it can be taken to similar communities and worked with, rather than having to start from scratch each time. Dakin aims to “make progress happen bottom-up.”
WomensTrust has additional incentives for success—those who become involved and take out loans through the organization are given a one-year health insurance card. Ankrah explained that in Ghana, health care is extremely limited and expensive, so many go without healthcare, but WomensTrust increases their access to it. Without an insurance card, hospitals can and do turn away the sick and injured. Now, women have the opportunity to care for their families, giving them one less burden to worry about.
The organization is also trying to keep girls in Pokuase in school. Many girls drop out at a young age, following in the footsteps of their mothers, so the cycle of abuse and poverty continues. Ankrah explained that many girls in Pokuase and other villages in Ghana become pregnant by the time they are in sixth grade, forcing them to drop out. However, WomensTrust provides scholarships to girls in need, so that they can continue their education.
The organization have already seen positive changes since beginning their initiative in Ghana. Dakin remarked at the progress of seeing men and women working together. Previously, it was seen as degrading and lowly for a man to work with, or do what is traditionally considered “women’s work”. However, since providing the loans, the stress of providing for families has been alleviated, or at least decreased, making it more acceptable for men to work with and help women in domestic work. Because of this, they have also seen a decrease in domestic violence, showing a promising future for the women of Ghana.
Ghana isn’t the only country that has issues with the status of women and feminism. Organizations like the National Organization for Women are working to promote feminism around the globe. While it might seem apparent that women’s rights are equal to those of men in the United States, the issues remain within our borders, but especially outside of them. Discrimination based on gender exists in many countries, and reproductive rights are a constant struggle which seems to have no positive end in sight. Organizations such as NOW and WomensTrust are helping spread global feminism through microfinance, but more importantly through activism in general. By making women’s rights an issue which they actively seek to promote, more people hear about it and can understand the issues. And understanding the issues is the first step to solving them.
Accra Mail -
The Minister of Finance and Economic Planning, Dr Kwabena Duffour, has charged state-owned SIC Life, a leading life assurance company in the country, to ride on the back of its new microfinance company and reach out to small businesses.
The minister urged the life assurance company to combine microfinance with micro-insurance and assist small and medium-scale companies to grow.
Dr Duffour made the call when the management of SIC Life presented a cheque to the minister as part-payment of its dividend to the government.
Although the face value of the cheque was not disclosed, management of the company later told the Daily Graphic that the amount represented 76 per cent of the total dividend due to the government, which owns the majority stake in the company,
SIC Life also paid dividend to SIC Insurance Company Ltd, the minority shareholder.
The company was crafted in response to the new insurance law which stipulates the separation of the life business from general business.
This means that SIC Life has been operating for barely four years, but managed to declare dividend.
The finance minister commended the management team for their untiring efforts and charged them to go for more life business both in the public and private sector in order to pay more dividend in the coming years.
He said their microfinance and insurance products were strategic measures to help alleviate poverty in rural areas.
The Chief Executive Officer of SIC Life, Mr Issah Anafure, announced that the life assurance company had just started another subsidiary which would be doing microfinancing.
He said with the head office in Accra, the company would soon open branches in busy economic centres such as Techiman and other communities in the Brong Ahafo Region.
The CEO said the company was working hard to penetrate the life assurance market and expressed the hope that it would pay bigger dividends in the years ahead.
From Ghana Business News -
Mr Okoh Sai, Director Banking Supervision Department of the Bank of Ghana (BoG), on Thursday revealed that fifteen Rural and Community Banks (RCB) have been categorized for liquidation.
He said transactions of about 121 out of the current 136 RCB were considered practical and satisfactory according to a BoG banking auditors report.
“Liquidation in the banking sector is executed not to cause systemic problem but to weed out and reduce risk in the financial sector,” Mr Sai stated at a day’s Development Dialogue Series seminar in Accra for Sensitisation and Launch of “Rural Banking: The Case of Rural and Community Banks in Ghana,” survey report.
The study was commissioned by the World Bank and ARB Apex Bank which focused on the emergence and evolution of rural and community banks; review of Ghana’s financial sector; the legal, regulatory and supervision framework governing RCBs.
Mr Sai called on RCBs to strengthen the capacity of their Board members, Shareholders and staffs to understand transactions in the financial sector. “This will ensure that annual general meetings are not used for checking the grammatical errors in audited accounts but to scrutinize the report”.
He said RCB’s need to establish strong management systems, adopt innovative business portfolios and penetrate into the rural communities in order to face the competition posed by the universal banks’ infiltration into their catchment zones.
Dr David Andah, Chief Executive Officer of Ghana Microfinance Institutions Network (GHAMFIN), contributing to the discussion noted that universal banks pulled out of rural communities due to operation challenges in the past leading to the establishment of the first rural bank in 1976.
“Today, due to the hard work of rural and community banks, the enabling financial environment has been created in the catchments zones attracting the universal banks with their enticing packages.
“Staffs and customers of RCB have become their target with succulent incentives coupled with unfriendly regulations and policy by the Bank of Ghana (BoG) is hindering the growth of RCB”.
Dr Andah cited some of the BoG unfriendly regulations and policies as fixing of new Minimum Capital for new RCBs at 150,000 Ghana cedis, whilst existing RCB’s are to raise their capital to 150,000 Ghana cedis.
He said the directive that RCBs with stated capitalisation below 150,000 Ghana Cedis would not be allowed to pay dividend or open new branches until they attain the threshold, is hindering the growth of RCBs.
Dr Andah appealed to the Government to intervene and assist ARB Apex Bank to resuscitate RCBs “as the full cost recovery regime of ARB Apex Bank obstructs the capacity building efforts of RCBs”.
He also called on BoG to review the numerous restrictions imposed on RCBs in view of the invasion of rural areas by the universal banks which has created an uneven playing field.
Mr Ajai Nair, Programme Coordinator, Agriculture Finance Support Facility of the World Bank, explained that the case study describes the history and business model of rural and community banks network in Ghana, analyses its performance, identifies key issues and makes recommendations on the way forward.
Mr Emmanuel Asiedu-Mante, Former Deputy Governor of Bank of Ghana, who chaired the seminar encouraged managements of rural banks not to seek for protection against competition but to adopt innovative and efficient modes of operation to strengthen their position in the market.
GNA – Mr. Eric Osei-Bonsu, Managing Director of ARB the Apex Bank Limited, has suggested the enforcement of quality human resource and incentive policies to enable rural and community banks (RCBs) to deepen microfinance for rural development. He said RCBs need to reposition themselves to offer efficient and effective services to prevent client loss and improve the impact and image of rural banking.
The managing director was addressing the opening of the 9th managers’ conference of the ARB Apex Bank Limited and RCBs in Sunyani. The three-day conference, is under the theme, “Deepening Microfinance to serve the rural economy – The role of Rural and Community Banks.” Mr. Osei-Bonsu said the Apex Bank would develop and support the establishment of rural banks’ credit bureau to ascertain the credit worthiness of existing and potential clients of RCBs, as well as weed out fraudulent and bogus borrowers.
He suggested the designing and implementing of innovative products, including ICT-driven ones, in line with the vision of the Apex Bank, explaining, “because we believe this will help accelerate rural development.”
Rural and Community Banks could also develop and provide new products like micro insurance, weather insurance and micro home loans, as well as a microfinance policy that seeks to address some challenges, he added. The managing director mentioned some of the challenges as institutional arrangement for the promotion of microfinance, capacity building, credit delivery and management and targeting the vulnerable and the marginalized. Others are data information gathering and dissemination, regulation and supervision, consumer protection, collaboration and co-ordination, research, monitoring and evaluation.
Mr. Osei-Bonsu noted that the rural banking sector, which commenced in the country in 1976, at Nyakrom in the Central Region, “has been a sleeping giant as far as microfinance is concerned”.
“It is in pursuance of the need to propagate the rural banking and microfinance message that the Apex Bank would be embarking on an aggressive consultancy to the countries in the sub-region to ensure that the benefits enjoyed thus far are replicated effortlessly in the countries which share our aspirations and needs in the region,” he said.
On the benefits of microfinance to RCBs, the Apex bank boss mentioned an improvement in loan portfolio since microfinance programmes had high recovery rates as compared with traditional retail banking. Mr. Osei-Bonsu said RCBs would also have the opportunity to diversify their portfolio to reduce the high incidence of default as well as enabling them to improve or discharge their social responsibilities such as offering financial literacy programmes before disbursement of loans (credit with education) thereby contributing to client capacity building. He explained that microfinance would also give the RCBs better positioning to favourably compete with the universal banks within their catchment areas, as well as attract the attention of external donors to channel financial and non-financial assistance to support RCBs to achieve their key objective of reducing poverty in rural areas. Mr. Eric Opoku, Deputy Brong Ahafo Regional Minister, in his address, noted that rural banks had positively impacted on the lives of many poor and infantile business ventures since 1976.
“Apart from being one of the most promising ways to make credit available to the poor, they make savings services available and thus making unproductive cash available for productive use rather than keeping monies under beds and in holes etc,” he said. The deputy regional minister noted that microfinance had become a conduit through which various interventions had been received by beneficiaries in the districts and many rural dwellings, thereby transforming their socio-economic status, as a result of the presence of rural banks.
Mr. Opoku said despite the positive dividends there was the need for better collaboration with the various interventions in times of recovery from economic recession. “It is our belief that rural banks have developed better processes and mechanisms which they could apply to deepen microfinance administration,” he said, explaining it would not be out of place if in the near future some microfinance schemes such as MASLOC could be channelled through the rural banks for better impact.
Professor Kwasi Nsiah-Gyabaah, President of the Brong Ahafo Chapter of the Association of Rural Banks, who presided, noted that rural banks faced serious challenges and stiff competition from the commercial banks “which have now penetrated the rural areas and are offering cheap credit facilities to attract costumers of the RCBs. To remain competitive, retain and attract new costumers, the RCBs need to provide prompt and quality service to customers, as well as capitalize on the potential opportunities in the rural areas to reduce their vulnerability.
He asked the conference to consider the issue of redemption of bonuses to shareholders in terms of levels and regularity of dividend payment as a tool for further investment. “We have convinced our shareholders that if they purchase shares of our banks, they would be paid dividend in successful financial years,” Prof Nsiah-Gyabaah stated. “Yet most of our RCBs gradually renegade on these enticing promises. While management, staff and sometimes directors enjoy their privileges and peps, shareholders fail to receive their dividends. “There is no fairness in many RCBs in this regard because no matter how poor the financial position of the RCBs, managers and staff always ensure that they receive their salaries.” He said following recent changes in the financial market and the constant upward review of the paid-up-capital of RCBs by the Bank of Ghana, many rural banks would need to take a decision to merge, be acquired or take the risk to be liquidated. “We need to swallow our pride and forget about the identity cult’ and accept the reality either to merge or remain to be acquired,” the B/A Chapter President added.