The Bank of Ghana (BoG) will begin a clean-up of the microfinance
sector by the second quarter of this year, the Governor, Dr Ernest Addison has
The move, he said, was to build a strong and vibrant microfinance
sector and protect the investments of depositors in the sector.
Dr Addison who is the Chairman of the Monetary Policy Committee
(MPC) of the BoG disclosed this at a press confab after the 87th
regular meeting of the MPC said the clean-up of the microfinance sector was
estimated to cost the country GH¢700
He explained that the BoG in consultation with the
Ministry of Finance had almost secured the financial resources for the clean-up
of the microfinance industry.
Currently, there are more than 319 licensed microfinance
companies across the country.
The microfinance industry is going through financial
difficulties with some unable to fulfill their financial obligations when they
fell due, thus putting their depositors at risk.
Some of the factors which had brought about the
challenges facing the microfinance sector include poor corporate governance,
mismanagement, poor credit risk controls, and high interest rate they charge
customers on loans, thus making borrowers unable to pay back their loans.
Dr Addison did not provide much information on the
exercise, but said that the BoG was in discussion with the Ministry of Finance (MOF)
on the modalities of the exercise.
“We are yet to agree on the exact date to begin the
exercise,” he said, adding that “hopefully the exercise will be done in the
second quarter this year.”
He said the BoG would give detailed information on the
exercise when it completes discussions with the MoF and the modalities for the
A banking consultant, Nana Otuo Acheampong in an
interview with the Ghanaian Times lauded the BoG for the move to clean up the microfinance
He said though the challenges being faced by the microfinance
sector could not have any major impact on the economy, there was the need to
clean up the sector.
An economic analyst with Databank, Courage Boti for
his part said the “clean-up” was long overdue, saying it is a move “in the
He said the clean-up would ensure the growth of the
sector to contribute to the economic development of the country.
“The clean-up of the microfinance industry by the BoG will ensure proper regulation, adherence to good corporate governance practices, and good credit control practices,” Mr Boti said.
By Kingsley Asare
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