The Ghana Association of Microfinance Companies (GAMC) is asking its members to merge, as part of moves to strengthen and consolidate institutions in the sector.
The consolidation of the existing institutions is needed to strengthen members of the association to be able to deliver the needed financial support to businesses in the microenterprise sector.
The National Chairman of the Ghana Association of Microfinance Companies (GAMC), Mr Collins Amponsah-Mensah, told the GRAPHIC BUSINESS that the mergers were also needed to bring the number of microfinance institutions (MFIs) in the country to a manageable level.
“We are discussing mergers among our member institutions because we think that the numbers are too much for now.
“If we can strengthen the existing ones through mergers and acquisitions, we will then have a manageable number and that will still be able to provide the needed support to the micro enterprise sector,” he stated.
Already, the regulator of the financial sector, the Bank of Ghana (BoG), has suspended the issuance of new licences to investors seeking to operate microfinance companies.
The suspension is to help existing institutions to address their inherent challenges before the issuance of the new operating guidelines.
Mr Amposah-Mensah was optimistic that getting institutions to merge would combine with the freeze on licenses to strengthen the sector further.
Incentives
Currently, there are some communities in the country that did not have access to financial services. This situation requires pragmatic efforts to ensure that government’s financial inclusion agenda is met.
While this is not good, the National Chairman of the GAMC said that was as a result of lack of incentives for institutions to enter remote areas.
“We have to go back to the financial institution map of the country to look at the allocation and where we don’t have institutions, we need to have an incentive package that will make it attractive for institutions to move to these places.”
“If we are to achieve our financial inclusion target, then we need to cover every area,” he said.
Capacity building for licensed institutions
The GAMC has, in the past, organised a number of capacity-building workshops for its member institutions to ensure that they have the right competencies to do what has been mandated under their licenses by the BoG.
The training includes credit management, liquidity management, governance and delinquency management.
The BoG has also issued operating guidelines for microfinance institutions, which comprise deposit taking and credit institutions, with details on how they are supposed to operate.
Mr Amposah-Mensah lauded their relationship with the regulator as good and thus called for it to be deepened in the coming years.
“There has been a lot of consultation (with BoG) through which we are able to give signals to our members on time, and for them to take action on time,” he said.
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