Banking Consultant, and Head of the Osei Tutu II Centre for Executive Education & Research, Nana Otuo-Acheampong has expressed optimism in the new regulations announced by the Bank of Ghana (BoG) aimed at strengthening activities in the microfinance industry.
As part of the regulations, the central bank has directed microfinance companies to observe corporate governance practices by going through approved processes to appoint board of directors.
Speaking to Citi Business News, Nana Otuo-Acheampong was hopeful the new regulations will check microfinance companies to prevent a debacle.
“The part that I’m very happy about is the corporate governance part, because at the end of the day, if you go through the research into the reason why microfinance companies have collapsed which our institution have been doing you will see that most of the time it was because of poor corporate governance,” he said.
He maintained that corporate governance structures will ensure microfinance companies adhere to strict rules since any deviation from the rules will attract severe sanctions from the regulator.
“When you have good corporate governance structures in place then it ensures the survival of your operations and if you look at the history of how these micro finance institutions were formed that was their main bane, having been able to put together a good set of board of directors who will be able to steer the affairs of the institutions,” he stressed.
He lauded efforts by the BoG in allocating a full chapter to corporate governance since it will be an anchor to maintain stability in the industry.
“If they are enforced then we can say that the microfinance institution is doing better, at the end of the day we need them we can do without them , because they are providing a good service in a niche market,” he noted.
Thousands of Ghanaians have lost millions of cedis in the past 3 years from the collapse of some microfinance companies.
Customers of DKM Microfinance, and God is Love Fund Club, among others misappropriated fund of customers.
The situation resulted in panic withdrawals as customers thronged to such microfinance companies to demand their investments.
The BoG directed that the assets of such companies be frozen for a liquidation process to start.
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