MICROCAPITAL BRIEF: Thirty Microfinance Institutions (MFIs) Close in Ghana

Approximately 30 unnamed microfinance institutions (MFIs) collapsed in Ghana during the first quarter of 2013 due to an alleged inability to “sustain their operations.” As a consequence of the collapse, customers were not refunded any money that they deposited, reportedly because owners could not be traced or the companies did not have the funds to pay them [1]. Due to lack of client protection following this collapse of MFIs, the Ghana Association of Microfinance Companies (GAMC), an association of companies providing microfinance services in the country, allegedly is planning to adopt consumer protection principles in order to protect the clients of member companies.

The second annual general meeting of GAMC met in Ghana in August 2013 to discuss the role of MFIs as a tool for national development and the provisions that should be instituted for their operations to regulate any “malicious behavior,” such as charging high interest rates [1].

GAMC has approximately 560 members that provide lending and deposit products to their clients. As of December 31, 2012, the members of GAMC had an aggregate loan portfolio of approximately GHS 850 million (USD 400 million).

By Anesa Kratovac, Research Associate

About Ghana Association of Microfinance Companies (GAMC)

Ghana Association of Microfinance Companies (GAMC) is an association of 560 member companies providing microfinance services in Ghana. Member companies offer both lending and deposit products to their clients. It is limited by guarantee and was registered in Ghana on the 20th of May, 2011. As of December 31, 2012, GAMC had approximately GHS 279,000 (USD 131,000) and a loan portfolio of GHS 850 million (USD 400 million).

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 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 year-end 2012, BOG has total assets of GHS 31.5 billion (USD 16.5 billion), return on assets (ROA) of 4.9 percent and return on equity (ROE) of 25.8 percent.

Additional Sources and Resources:

[1] Ghana Business News article, August 19, 2013, “30 microfinance institutions collapse and clients lose money,” http://www.ghanabusinessnews.com/2013/08/19/30-microfinance-institutions-collapse-and-clients-lose-money/

MicroCapital.org Article, August 6, 2013, “MICROCAPITAL BRIEF: Money Lenders Association of Ghana Signs Memorandum of Understanding to Provide Members with Microinsurance Products,” https://www.microcapital.org/microcapital-brief-money-lenders-association-of-ghana-signs-memorandum-of-understanding-to-provide-members-with-microinsurance-products/

Microcapital Monitor: The Microfinance Newspaper top story brief, July 2013; Volume 8, Issue 7, pg 1 “Ghanaian Microbanks Cite Heavy Withdrawals”

MicroCapital.org Article, July 18, 2013, “MICROCAPITAL BRIEF: 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.org Article, March 21, 2012, “MICROCAPITAL BRIEF: 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 Profile: Ghana Association of Microfinance Companies (GAMC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ghana+Association+of+Microfinance+Companies+%28GAMC%29

MicroCapital Profile: Bank of Ghana (BoG), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Ghana+%28BOG%29

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