Help solve challenges in microfinance sector - BoG

The Head of Banking Supervision at the Bank of Ghana (BoG), Mr Franklin Belynye, has entreated all stakeholders in the microfinance sector to help find solutions to the numerous challenges facing the sector because of their threat to the entire financial system.

The challenges, he said, included under capitalisation and pricing, incompetence in fund management, the large applications from potential companies among many others things.

He was speaking at the 7th Ghana Microfinance Forum in Accra on the theme, “Microfinance Regulation and Compliance”.

Mr Belnye said many people depended on microfinance institutions for their livelihood, a situation which was vital to the country’s economic development, for which reason the growth of the sector must be supported.

“We have received over 700 applications and we are working to speed up the licensing process, but those on the ground are developing faster than we envisaged. Although they need to operate for about six months, some of them are, indeed, running ahead to expand,” Mr Belynye said at the seventh Ghana Microfinance Forum in Accra.

Mr Belynye said most people had misunderstood the concept of microfinancing and saw the sector as entrepreneurship, saying it required some level of understanding and expertise.

He said it was necessary to provide practitioners with the skills and knowledge they needed to be efficient.

“It is a difficult terrain so we need to continue to engage all operators to be able to deal with the challenges. Collecting deposits and recovering them require a lot but most people do not anticipate that,” he said.

He said regulation of the sector must be tightened, especially issues concerning minimum capital and regular reporting at the central bank.

The Executive Secretary of the Ghana Association of Microfinance Companies (GAMC), Mr Richard Amaning, admitted some of the issues but said they also had real challenges.

He said the collapse of some microfinance companies due to their inability to meet the regulatory requirements, had affected the activities of regulated companies due to public misconceptions.

By Ama Amankwah Baafi/Daily Graphic/Ghana