Dr. Henri Kofi Wampah, governor of the Bank of Ghana (BoG), reportedly has announced the closure of seven microfinance companies for failing to obtain operating licenses from BoG, the country’s central bank. Microfinance institutions (MFIs) in Ghana had been given until July 2012 to comply with this and other regulations. The MFIs in question are Unity Trust Micro-Finance in Somanya, Multi Credit Micro-Finance in Cape Coast, Busy Fingers at Nima in Accra, Mfa Micro-Finance at La in Accra and the following three in Kumasi: Equip Susu Micro-Finance, Emends Micro-Finance and Divine Micro-Finance. These MFIs have been told to refund money collected from customers and to cease all operations. BoG has reportedly also cautioned the public not to engage with MFIs that fail to display their operating licenses.
Mr. Franklin Belnye, head of the Banking Supervision Department at BoG, reportedly stated earlier in 2012 that inappropriate documentation, unqualified staff, inadequate financial projections submitted to BoG, a rush to establish branches and the offering of unattainable returns were among the challenges presented by MFIs in the country. Mr. Belnye was quoted as having said, “In recent times, micro-finance companies are springing up by the day. However, the rate of growth in the sector has brought to the fore the urgent need to strengthen its regulation and supervision to streamline its operations”.
The 78 Ghanaian microfinance institutions reporting 2011 data to the US-based nonprofit Microfinance Information Exchange report total loans of USD 225 million and deposits collected totaling USD 238 million.
As of December 2011, BoG reported total assets of GHS 12.4 billion (USD 6.6 billion).
By Lena Phillips, Research Associate
About the Bank of Ghana (BoG)
The Bank of Ghana has regulatory and supervisory authority over banking and financial institutions in Ghana, including rural and community banks, savings and loan companies, credit unions and cooperatives. The Bank of Ghana is to conduct annual on-site audits of these institutions, however nonprofit organizations in Ghana are not regulated by any government agency. As of December 2011, BoG reported total assets of GHS 12.4 billion (USD 6.6 billion).
Sources and Additional Resources:
Ghanabusinessnews.com article: “Bank of Ghana Shuts Down Seven Microfinance Companies”, http://www.ghanabusinessnews.com/2012/12/18/bank-of-ghana-shuts-down-seven-micro-finance-companies/
MicroCapital.org article, 26 November 2012: “MICROCAPITAL BRIEF: Bank of Ghana Warns of False Advertising bi Microfinance Institutions Medlorn Microfinance, African Guarantee Trust, AbbeyCash Microfinance, Swift Financial Services”, http://www.microcapital.org/microcapital-brief-bank-of-ghana-warns-of-false-advertising-by-microfinance-institutions-medlorm-microfinance-african-guarantee-trust-abbeycash-microfinance-swift-financial-services/#more-21208
MicroCapital.org article, 15 November 2012: “MICROCAPITAL BRIEF: Bank of Ghana Grants Final License to 90 Financial Institutions”, http://www.microcapital.org/microcapital-brief-bank-of-ghana-grants-final-license-to-90-financial-institutions/
MicroCapital.org article, 13 September 2012: “MICROCAPITAL BRIEF: ProCredit Ghana Sounds Alarm on Multiple Lending, Calls for Tighter Entry Requirements for Microfinance Institutions”, http://www.microcapital.org/microcapital-brief-procredit-ghana-sounds-alarm-on-multiple-lending-calls-for-tighter-entry-requirements-for-microfinance-institutions-mfis/
MixMarket.org Country Profile: Ghana, http://www.mixmarket.org/mfi/country/Ghana
MicroCapital Universe Profile: Bank of Ghana (BoG), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Ghana+%28BOG%29
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