Ghana rethinks its microfinance
Ghana is to modify the rules regulating its microfinance market following the failure of five institutions earlier this summer.Ghana is to modify the rules regulating its microfinance market following the failure of five institutions earlier this summer.
In total, 25 such institutions have closed down since the beginning of the year and their customers lost all their money.
A number of people in the country fear that some microfinance institutions might be created with the sole purpose of conning potential clients.
Last year, Ghana introduced a minimal capital requirement of $51,410, a lot less than the $257,050 initially asked for by the Bank of Ghana.
Increasing the minimal capital requirement necessary to launch a new microfinance institution should dissuade people only wishing to go into this market to con others.
However, such a decision could have a negative impact on access to finance in rural areas since it could discourage potential microfinance institutions from focusing on these regions.
Microfinance institutions are not always popular in Ghana. Banks have recently announced that they thought their multiplication was a threat to their own business.
According to the Central Bank, the number of microfinance institutions increased from 90 to 228 between December 2012 and June. For a deputy governor; this means an increase of financial activity at a micro level.