The Ghana Association of Microfinance Companies (GAMC) is tightening its operational loopholes to help rid the industry of unscrupulous institutions that defraud customers.
The association said it was collaborating with the Bank of Ghana (BoG) to address the issue of licensing in the industry, as well as reviewing its membership processes to ensure that due diligence was conducted on companies before joining the association.
The Executive Secretary of the GAMC, Mr Joseph Donkor, in an interview said so far, 485 members had been licensed by the BoG to operate, which paves way for strict supervision.
“As an association, we are also looking at our membership procedures to ensure that due diligence is done before we allow companies to join,” he said in an interview on September 13.
The association, he said had also revised its constitution and code of conduct to ensure that members of the association carried out their operations well.
“As part of the licensing requirements, members are supposed to join the association. We have revised our constitution and our code of conduct as we want to ensure that our members carry out their operations well,” he said.
The BoG introduced the licensing for MFIs to ensure that patrons have access to genuine companies offering genuine services and can be assured of getting their investments back as and when the need arises.
The microfinance landscape today is widespread, making it difficult for patrons to cross-check and authenticate their liquidity before engaging their services.
Currently, it is very worrying to observe how some people are frustrated in getting their investments back from some companies they had saved with for a while.
While others are lucky to have had their investments back after much stress, others are currently pursuing theirs with the hope of obtaining it soon.
This has led to loss of customer confidence in the sector, which is affecting the operations of genuine companies.
Increased surveillance
Most of the cases of microfinance service providers absconding with people’s savings occur in the regions, and this has prompted the association to increase its surveillance in the regions to ensure that the rate at which it occurs is reduced.
Mr Donkor explained that “we have increased our surveillance in the regions to ensure that people who do not have licenses and illegal operators are quickly brought to book by notifying the regulator,the BoG.
Also, the association he said was working the Bank of Ghana to come out with a logo to clearly distinguish genuine providers from unscrupulous ones.
New code of conduct
The Ghana Microfinance Institutions Network (GHAMFIN) which is a network of apex associations and their member institutions engaged in the provision of microfinance services has introduced a common code of conduct aimed at enabling players in the industry to follow fair practices and consumer protection principles in line with expectations of the Bank of Ghana, the government and other stakeholders.
The code of conduct among other things seeks to encourage greater client protection practices through transparent product information, pricing responsible sales, adequate grievance recourse mechanisms, fair practices and client education.
The network comprises a range of microfinance sectors such as the ARB/ARB Apex Bank Limited, Association of Financial NGOs (ASSFIN), Ghana Cooperative Credit Unions Association (CUA).
Others include the Ghana Cooperative Susu Collectors Association (GCSCA), Ghana Association of Savings and Loans Companies (GHASALC), Ghana Association of Microfinance Companies (GAMC), Money Lenders Association of Ghana (MLAG) and the Business Development and Technical Service Providers. – — GB
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