MICROCAPITAL BRIEF: As Ghanaian Microfinance Grows, Some Express Need for Lower Interest Rates, More Transparency

As the number of microfinance institutions (MFIs) in Ghana has grown over the last five years, there have been mixed reviews of the impact of microfinance. The Bank of Ghana reports a jump from 9 to 12 in the number of microfinance-oriented savings and loan companies through February 2011. Counting rural banks, credit unions and facilitating non-governmental organizations working in microfinance, the total number of microfinance organizations in Ghana reportedly exceeds 100. Some see these as uniformly beneficial, while others see the need for improvement. An anonymous microfinance manager in Accra commends the industry and his own organization’s 3.5 percent interest rate per month, while some customers claim most organizations charge up to ten percent interest per month. One microfinance borrower, Marian Kyei, reportedly stated that she would like the Bank of Ghana to publish a list of “reputable” MFIs so that clients can be more confident that interest rates are fair when choosing a lender.

Ghanaian microfinance companies are defined by the Bank of Ghana as non-bank financial institutions that can accept deposits from individuals and microenterprises and give short-term loans. The 56 MFIs in Ghana report 2010 data to the US-based nonprofit Microfinance Information Exchange (MIX) totaling a loan portfolio of USD 1.6 million disbursed to 202,000 active borrowers.

By Charlotte Newman, Research Associate

Sources and Resources:

Interviews conducted by MicroCapital staff

Voice of America: “Microfinance Services in Ghana Greeted with Hope, Concern,” http://www.voanews.com/english/news/africa/west/Microfinance-Services-In-Ghana-Greeted-With-Hope-Concern-138775849.html

MicroCapital.org story, January 27, 2012, “MICROCAPITAL BRIEF: MFTransparency Releases Microloan Pricing Data for Ghana, Zambia, Tanzania,” https://www.microcapital.org/microcapital-brief-mftransparency-releases-microloan-pricing-data-for-ghana-zambia-tanzania/

MicroCapital.org story, December 1, 2011, “MICROCAPITAL BRIEF: Goodwell West Africa Invests $1m in Microfinance Provider Nwabiagya Community Bank of Ghana,” https://www.microcapital.org/microcapital-brief-goodwell-west-africa-invests-1m-in-microfinance-provider-nwabiagya-community-bank-of-ghana/

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