MICROCAPITAL BRIEF: Bank of Ghana Warns of False Advertising by Microfinance Institutions Medlorm Microfinance, African Guarantee Trust, AbbeyCash Microfinance, Swift Financial Services

The Bank of Ghana (BOG), the regulatory and supervisory body with authority over financial institutions in the country, is warning customers of the following Ghanaian microfinance institutions (MFIs) falsely claiming to be licensed by BOG in Ghana: Medlorm Microfinance Limited, African Guarantee Trust, AbbeyCash Microfinance Limited and Swift Financial Services.An MFI in Ghana is only granted final approval once it is deemed to have met the conditions specified by BOG during the provisional approval stage. Until this occurs, it is illegal for MFIs to “[mislead] the public by creating the impression that a provisional approval amounts to a final license”, “[use] the Bank of Ghana’s licensing process as an advertising tool for their businesses.” Additionally, it is unlawful for an MFI to “engage in deposit taking activity without a prior approval”. Defiance of these conditions is supposed to result in closure of the business. Thus far, 45 MFIs are in the provisional approval stage while other applications are still being processed.

78 MFIs report data to the US-based nonprofit Microfinance Information Exchange (MIX). As of 2011, these MFIs report total loans of USD 225 million outstanding to 300,000 active borrowers and USD 238 million in deposits collected from 917,000 depositors.

By Sarah Benali, Research Associate

About Bank of Ghana
The Bank of Ghana has regulatory and supervisory authority in Ghana over banking and financial institutions, including rural and community banks, savings and loan companies, credit unions and cooperatives. The Bank of Ghana conducts annual on-site audits of these institutions, however nonprofit organizations in Ghana are not regulated by any government agency.

Sources and Additional Resources

Bank of Ghana Press Release: “Licensing of Microfinance Institutions,” April 2012, http://www.bog.gov.gh/privatecontent/Public_Notices/LICENSING_OF_MICROFINANCE_INSTITUTIONS.pdf

MicroCapital.org story: “MICROCAPITAL BRIEF: Bank of Ghana Grants Final License to 90 Financial Institutions,” November 15, 2012, https://www.microcapital.org/microcapital-brief-bank-of-ghana-grants-final-license-to-90-financial-institutions/

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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