MICROCAPITAL BRIEF: Government of Ghana Restores Losses to Customers of Failed Microfinance Institutions (MFIs), but $150m of Savings Remain “in Jeopardy” in Advance of Deposit-insurance Rollout

After the collapse of approximately 100 licensed microbanks in Ghana over four years, the country’s central bank, the Bank of Ghana, has announced it will refund deposits of up to GHS 10,000 (USD 2,000) per retail customer affected. Estimates of the total losses exceed GHS 1 billion (USD 200 million), including GHS 522 million (USD 105 million) in claims resulting from the collapse of DKM Diamond Microfinance in 2015. As of December 2018, the government has repaid 80 percent of the DKM Diamond deposits. The total number of customers impacted by all of the failures is in the tens of thousands.

Meanwhile, the Bank of Ghana is in the process of establishing a deposit-insurance scheme that will cover deposits of up to GHS 5,000 (USD 1,000) per retail customer. Among the country’s microfinance institutions (MFIs) and rural banks, the Bank of Ghana estimates the amount of deposits “in jeopardy” is GHS 741 million (USD 150 million) – over half of the total held by these institutions.

By Michelle Fleming, Research Associate

Sources and Additional Resources

Bank of Ghana transcript of press briefing
https://www.bog.gov.gh/privatecontent/MPC_Press_Releases/Transcript%20of%20MPC%20Press%20Briefing%20-%20November%2026%20%202018_Revised.pdf

Ghanaweb press release
https://www.ghanaweb.com/GhanaHomePage/business/Bailout-of-all-microfinance-depositors-underway-705283

MIX profile on microfinance in Ghana
https://www.themix.org/mixmarket/countries-regions/Ghana

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/.