The Ghana Association of Microfinance Companies (GAMC) held its 13th Annual General Meeting (AGM) on Thursday, December 5, 2024.

The event was organized under the theme “The Path to Financial Sustainability: Ensuring Long-Term Viability of Microfinance Companies” and addressed key milestones, challenges, and strategies to strengthen the microfinance sector.

Speaking at the AGM, the Chairperson of GAMC, Mrs Rebecca Addo in her address highlighted the AGM’s role in uniting members to assess progress and confront challenges.

“This meeting helps us continue our collective journey towards ensuring the financial sustainability of the microfinance sector,” she said.

Mrs Addo also noted the importance of financial resilience in serving under-served communities.

“Our focus remains on strengthening our financial performance and foundational pillars to ensure the sustainability of our member institutions,” she stated.

The association also highlighted its partnership with GIZ and GHAMFIN, which facilitated a revolving credit fund to boost liquidity for members, adding that training programmes in risk management and operational efficiency were also prioritized.

“We encourage members to adopt stricter credit controls, diversify portfolios, and embrace digital financial services to reduce costs and expand access,” Madam Addo entreated.

Acknowledging the inadequacy of current membership dues, the Chairperson of GAMC proposed adjustments to sustain the operations of the secretariat.

“A fair and sustainable dues structure is essential to ensure we continue to support members effectively.”

She also urged members to prioritize the submission of quarterly reports to the secretariat, describing them as vital for planning and operations.

Mrs Sarah Ofori, representing Mr Yaw Sarpong, Head of the Other Financial Institutions Supervision Department at the Bank of Ghana, graced the occasion as the Special Guest of Honour. She emphasized the department's commitment to ensuring the stability, soundness, and sustainability of Ghana's Microfinance Institutions (MFIs).

Recognizing MFIs' crucial role in deepening financial inclusion, providing credit access, and empowering the economically active poor, she noted that the sector's total assets had reached a significant 2.36 billion Ghana Cedis as of September 2024.

To further enhance outreach, Mrs Ofori urged MFIs to develop tailored products for specific groups like SMEs, women entrepreneurs, and local communities. She also encouraged the adoption of prudent lending practices, strong corporate governance, technological innovation, and sufficient financial buffers.

To reinforce the long-term viability of MFIs, the Bank of Ghana is currently reviewing the Business Rules and Sanctions to align with current conditions.

Mrs. Ofori commended GAMC for its advocacy efforts and role in fostering collaboration, which has significantly contributed to strengthening the sector.

“The partnership between the Association and the Bank of Ghana is vital and we look forward to continued corporation to ensure the sector’s resilience and growth.”

The Keynote speaker, Dr. Richmond Atuahene, a banking and corporate governance consultant, acknowledged the challenges being faced by financial institutions in recent years.

According to Dr. Atuahene, the sustainability of MFIs starts from its mission and vision sustainability to have a competitive advantage. Mission sustainability involves aligning organizational activities with its core mission and vision. Regular evaluation of activities is crucial and any changes to the mission must be well-planned and communicated within the organization.

He also revealed that MFIs can strengthen their financial sustainability by diversifying their revenue streams beyond traditional lending. By offering a range of value-added services, MFIs can create new opportunities for growth and stability.

Again, he encouraged MFIs to recruit, train, and develop skilled employees who can deliver high-quality products and services. Staff should also be responsible for monitoring the organization's performance and ensuring adherence to sustainability principles.

Additionally, MFIs must establish transparent systems with strong internal controls and audit functions. Accurate and comparable data on financial and social performance is essential for effective oversight by regulators, investors, and, most importantly, clients.

Touching on the role of Government in improving the long- term viability of MFIs in challenging times and the years to come, there is the need for a stable macroeconomic environment with low inflation, stable exchange rates, and reduced lending rates.

He further outlined other critical components for the long-term viability of microfinance institutions (MFIs), stressing the importance of good corporate governance, effective credit risk and loan monitoring practices, leveraging technology and MIS, and implementing robust operational risk management systems and strong client relationships.

"Good corporate governance and strong leadership are fundamental to the success of MFIs," Dr Atuahene stated, adding that clear structures and high moral values are essential for building trust and efficiency.

He highlighted the importance of risk mitigation, advising MFIs to document potential risks and develop strategies to address them.

Again, he noted that the transformative role of technology, urging MFIs to leverage IT systems for operational efficiency. "Proper IT services and a transparent system are key to building credibility and ensuring sustainable operations," he said.