Opportunities to offer qualitative micro credit to businesses and other individuals would be enhanced under the new licensing regime of non-bank financial institutions.
National Board Chairman of the Ghana Association of Microfinance Companies (GAMC), Collins Amponsah-Mensah, believes the group’s partnership with the Bank of Ghana “will help weed out bad nuts whose intentions are to deprive innocent depositors of their hard earned savings. There should be no cause for alarms for anyone doing genuine business”.
Credibility of microfinance institutions, he stated, would be enhanced when the Bank of Ghana’s regulation becomes operational next January, emphasizing that the high risk assessment of the sector would be relaxed in the interest of the borrowing public.
“Access to credit is based on one pillar – credibility – for now because we’re not regulated, a lot of financial institutions see us to be high-risk. So we believe that once we cross that line and we become licensed, then we build that credibility and so we can negotiate better rates on behalf of our people”, observed Mr. Amponsah-Mensah, in an interview with Luv Biz Report at the end of a capacity building programme organized for GAMC members in Kumasi.
The GAMC Board Chairman said the nationwide training forms part of the Association’s preparation towards the Bank of Ghana’s licensing, purposely to help the institutions enrich the process of management and administration.
“Microfinance in Ghana has proven to be a powerful tool for the promotion of financial inclusion, economic growth and employment creation. The fact cannot be ignored that microfinance is still in its infant stages in Ghana in spite of the fact that it has shown signs of growth evidenced in the number of companies and individuals who enter the industry each day”, Mr. Amponsah-Mensah noted.
He acknowledged that the regulations will bring prospects and challenges but enjoined operators to be guided by the principles of integrity, accountability and commitment in order to ensure that the deposits and savings of clients are secured and protected.
“The regulation of the sector must not cause fear and panic among microfinance practitioners. We must rather see it as recognition by government as an alternative financial service for the poor, low-income earners and those who hitherto were excluded from accessing any form of financial services”, he said.
The Association is operating under the second tier of the new four-tier operating rules and guidelines. Over 160 companies have so far registered with the GAMC to operate as susu companies taking deposits and making profits.