A new microfinance policy in sight

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The government is working with the Ghana Microfinance Institutions Network (GHAMFIN) and GIZ to develop and implement a national microfinance policy to realign microfinance activities with the country’s development goals.

The policy which aims to replace the existing regulatory frameworks which are considered inadequate and do not meet the needs of microfinance institutions (MFIs) in Ghana will focus on re-emphasizing the social mission of the industry while creating the conditions for its oversight framework to work.

Mr. Sampson Akligoh, Director of the Financial Sector Division (FSD) of the Ministry of Finance, made this known during the first edition of the Microfinance Forum organized by GHAMFIN and held on the theme “Development of microfinance in Ghana: historical perspective, policy, regulation and the future of the industry.

The Director of FSD, who was represented by Mr. Andrew Ameckson, Head of FSD’s Banking and Non-Banking Unit, said that the development and adoption of the policy would enable the industry to provide sustainable timely, diversified, affordable and reliable financial services to the low-income population in an integrated financial ecosystem.

“In the absence of clear strategic direction, most players behave purely like private MFIs, providing services reminiscent of traditional commercial banks and thus leaving out a large part of the low-income and poor population,” said he declared.

In line with the recommendations of a recent diagnostic study of the regulatory framework for the Specialized Depository Institutions (SDI) sector, he called for the consolidation of industry associations into a single body with a mandate to effectively represent the industry at regulatory and political.

He therefore said that it was important for industry players to establish GHAMFIN, an umbrella organization of seven MFI associations, to serve as an umbrella association and strengthen its structures.

“Government engagement with industry over the years has been rather limited due to its fragmented nature.

“It is always easier to work with banks thanks to the Ghana Banking Association. It is also easier to work with the rural and community bank thanks to the ARP Apex Bank. So it should be easier to work with the MFI sector,” he said.

He also noted that funding has been made available under the Financial Sector Development (FSD) project to develop specialized microfinance and deposit-taking institutions to improve the circulatory and supervisory framework, promote the consolidation and reduce regulatory arbitrage.

Professor Samuel Kobina Annim, a government statistician, urged MFIs to stick to their core mandate of meeting the needs of the poor in society by making funds available to people who need them to work and get out of poverty.

He expressed concern about the high concentration of MFIs with few or no branches in rural areas where their support was most needed.

He attributed the phenomenon to the lack of essential services in these places, which hampered the ability of these MFIs to thrive in these areas.

Going forward, he called for the development of a settlement policy that would consider the provision of essential services and amenities in the development of new settlements.

Dr. Seth Kwame Anani from the BoG’s Other Financial Institutions Supervision Department called on MFIs that had huge fixed deposit portfolios to diversify and grow their savings and loan portfolios to ensure sustainability.

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