Govt asked to integrate microfinance into financial system

An investment banker, Dr Samuel Ankrah, has advocated the need to fully integrate microfinance companies into the mainstream financial systems in the country.

The move, he said, would help create a better opportunity to improve financial inclusion in the country because many people outside the banking system would be formally captured.

Speaking at a banking and finance conference in Accra, Dr Ankrah said “we want to see a situation where microfinance can be integrated into the mainstream financial systems that provide for all the unbanked, including those in inaccessible regions within the country”.

He said the country required a high-quality, convenient and affordable financial services platform that will make it easier for people who did not fancy the main financial systems to feel encouraged to use microfinance platforms. 

Dr Ankrah said it was time for the country’s policy makers to begin to recognise that statutes that ignored the reality of low income families “are of toxic value to the economy”.

He based his call on the large informal sector and the equally larger number of people who do not have access to financial services.

Unbanked population

It is estimated that until the advent of microfinance institutions in the country, the percentage of people outside the banking sector was more than 60 per cent.

Today, much as the microfinance companies are beginning to rope in some of the unbanked, the fraudulent activitie+s of a few persons is affecting the level of confidence the people have in the system.

The case of the DKM scandal among many others has reduced the confidence of an already reluctant group in the banking system. It has been advocated that until the government takes drastic measures to restore the confidence of the people, the banking industry will suffer.

However, Dr Ankrah was confident the microfinance sector could be revived if it was properly integrated into the main financial system because of the enormous potential it held to improve financial inclusion in the country.

Mobile money

He said there was a lot of potential for the growth in the use of mobile money in the country once transaction cost was cheaper and easily accessible.

 Dr Ankrah said instead of people travelling longer distances to deliver cash for either business or personal upkeep of families in remote parts of the country, mobile money could be adopted and urged the government to create a much improved enabling environment for that to thrive as was the case in Kenya and elsewhere.