Agence Française de Développement (AFD) and the Ghana Association of Microfinance Companies (GAMC) have signed a €1.5 million facility grant agreement.
By the agreement, the GAMC will receive support from the Microfinance Companies Capacity Improvement Project (MICCIP) to strengthen its own abilities and those of its training centre and provide technical assistance to its members who have demonstrated a certain amount of professionalism and strong signs of sustainability.
This will eventually improve the quality of the financial services offered by Microfinance Companies (MFCs), to the benefit of disadvantaged populations and micro, small and medium-sized enterprises (MSMEs) from the formal and informal sectors.
The facility was signed in the presence of the French Ambassador to Ghana, Mr Frédéric Clavier.
A release made available to the Daily Graphic in Accra yesterday said the role of MSMEs to the economic development and growth of the country had long been established.
The release said they usually had difficulties in accessing funding in fair conditions, adding that helping these MFCs to improve on their quality would create more avenues for MSMEs which will enjoy more efficient and responsible financial services, leading possibly to access to credit at a lower cost with faster loan approval times.
The GAMC members are required to improve on their performances, the release noted, saying some of them would be selected to benefit from an 18-month technical assistance programme, build their financial skills and promote microfinance best practices.
These MFCs will thus be able to provide good quality financial services to small and micro-entrepreneurs that directly contribute to the local economy and the creation of income-generating activities.
The expectation is that there will be increased transparency and confidence within the microfinance sector leading to a more socially responsible and sustainable financial environment.
Ghana has been one of the main beneficiaries of AFD Group’s commitments in West Africa since 2004.
On a cumulative basis, total commitments of the Group from 2004 to date is €902.5m, out of which €805m covers loans, €85.5m, grants (including budget support) and €12m guarantees.
The AFD is a public development finance institution that has been working to fight poverty and foster economic growth in developing countries and the French Overseas Communities for 70 years. It executes policies defined by the French Government.
The GAMC is the body of companies providing microfinance services under tier two of Bank of Ghana’s categorisation. Member companies offer both lending and deposit products to their clients.