The Executive Director of the Association of Ghana Microfinance Institution Network has indicated that some of its members would struggle to meet the new deadline for the minimum capital requirement.
This was after the Bank of Ghana announced that it has set February 2020 as the deadline for Microfinance Companies and Rural and Community Banks to meet the new capital levels.
Speaking to JoyBusiness Yaw Gyamfi said some of his members currently have not met the capital and current development in the financial space have not been helpful for most of their members.
He added that they have struggled to even meet the June 2018 deadline because they were also struggling with the commercial banks to raise funds, “we are looking at whether a fund should be established to assist our members.”
“In that, we have numbers in terms of players reduced considerably and we need to expand our business to meet all the other places in the country. And so by my rough estimation, we have to find every means to meet the minimum capital.”
“some would struggle because there are that have dedicated themselves to operate at the margins of the country in very small areas, those places, if you have two million, will be extremely difficult to disperse and so those places we are thinking about them.
There is the option to look into other places because within the various regions we've lost a number of our institutions and these places are still open for people to do business with.”
Notice to shareholders
According to the Bank of Ghana, their directive is in line with Section 28(1) of the Banks and Specialized Deposit-Taking Institutions Act 2016 (Act 930) and Section 11 of the Non-Bank Financial Institutions Act, 2008 (Act 774).
The BoG says Rural, Community Banks and Microfinance Institutions that fail to comply with their respective minimum capital by the above date shall be sanctioned.
The central bank also asked Shareholders, Directors, Operators of Rural/Community Banks and Microfinance Institutions to take note of the above and be guided accordingly.
Association of Ghana Microfinance Institution Network has also maintained that looking at the current challenges facing the industry merging might be the best option for their members. Mr Gyamfi said the new regulatory stance means their members need to be strategic.
“I think what we've gotten to now, if you really want to maintain your business and you cannot meet the minimum capital then the best option will be for you to merge or let someone of a bigger institution acquire your institution and move one because as things stand now I have a strong belief that we cannot afford to lose more institutions.
It will not be in the interest of the country, it will not be in the interest of even the owners even the clients that we serve. These things do happen and we are not able to just expand the business beyond the two million then what becomes of our financial inclusion agenda. All these things would be affected negatively.”
He added “…we've seen signs that it's improving but it's not as fast as expected some people are so sceptical about whether it should work with any of these savings and loans, microfinance or any of them and I think today that we've seen the Savings and Loans also come into the process. Probably the public will be much more assured…”