The Bank of Ghana (BoG), the country’s central banking authority, has announced plans to limit the number of operating licenses it grants to microfinance institutions (MFIs) to an unspecified level. According to the Business & Financial Times, a Ghana-based publisher of financial and business news, BoG has issued over 340 licenses to MFIs since 2011, with approximately 600 applications still pending approval.
As the industry has witnessed rapid growth in recent years, BoG recently established the Other Financial Institutions Supervisory Department to monitor MFIs. Mr Raymond Amanfu, the head of the department, explained that “… we are tightening the controls so that the people who come in will have the capacity, the know-how and capital to manage the business.” According to B&FT, despite these recent efforts, illicit lending practices, including charging customers usurious interest rates and operating fraudulent investment schemes, are common.
By A’kos Szebeni, Research Associate
About Bank of Ghana (BoG)
Established in 1957, the Bank of Ghana (BoG) has regulatory and supervisory authority over banking and financial institutions in Ghana, including rural and community banks, savings and loan companies, credit unions and non-bank financial institutions. The mandate of BoG is to “maintain stability in the general level of prices, to ensure efficient operations of the banking and credit systems, [and] to support general economic growth” . BoG uses monetary and fiscal policies to achieve its mandate, acts as a banker and financial adviser to the government and performs annual on-site audits of the microfinance institutions within its purview through its Other Financial Institutions Supervisory Department. As of year-end 2012, BoG has total assets of GHS 21.7 billion (USD 9.2 billion).
Sources and Additional Resources:
 Business & Financial Times article, “BoG to cap microfinance licenses,” http://www.thebftonline.com/index.php?option=com_content&view=article&id=5514:bog-to-cap-microfinance-licences&catid=9:news&Itemid=207
MicroCapital, October 28, 2013, “Majority of Ghanaian Microfinance Institutions (MFIs) Allegedly Lack Operating Licenses, Bank of Ghana to Increase Surveillance,” https://www.microcapital.org/microcapital-brief-majority-of-ghanaian-microfinance-institutions-mfis-allegedly-lack-operating-licenses-bank-of-ghana-to-increase-surveillance/
MicroCapital, September 29, 2013, “Microfinance Companies in Ghana Allegedly “Reaping Heavily” from Small Businesses via High Interest Rates,” https://www.microcapital.org/microcapital-brief-microfinance-companies-in-ghana-allegedly-reaping-heavily-from-small-businesses-via-high-interest-rates/
MicroCapital, September 25, 2013, “Bank of Ghana Increases Liquidity Requirement for Microfinance Financial Institutions,” https://www.microcapital.org/microcapital-brief-bank-of-ghana-increases-liquidity-requirement-for-microfinance-financial-institutions/
MicroCapital, July 18, 2013, “Depositors Withdraw Savings from Microfinance Firms in Kumasi, Ghana amid Lack of Safety Nets for Clients,” https://www.microcapital.org/microcapital-brief-depositors-withdraw-savings-from-microfinance-firms-in-kumasi-ghana-amid-lack-of-safety-nets-for-clients/
MicroCapital, May 17, 2013, “Bank of Ghana Grants Licenses to 171 Financial Institutions as 116 Fraud Cases Involving Unlicensed Institutions are Pending,” https://www.microcapital.org/microcapital-brief-bank-of-ghana-grants-licenses-to-171-financial-institutions-as-116-fraud-cases-involving-unlicensed-institutions-are-pending/
MicroCapital, December 31, 2012, “Bank of Ghana Shuts Down 7 Microfinance Companies For Failure to Obtain Licenses,”
MicroCapital, March 21, 2012, “Bank of Ghana (BoG) Pursues Tighter Regulation, Enforcement of Microfinance Sector,” https://www.microcapital.org/microcapital-brief-bank-of-ghana-bog-pursues-tighter-regulation-enforcement-of-microfinance-sector/
MicroCapital Universe Profile: Bank of Ghana (BoG), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Ghana+%28BOG%29
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