BoG must expedite action on non-conforming microfinance companies

BY: Daily Graphic
Bank of Ghana

The advent of ‘susu’ (savings) schemes dates back many years.

The schemes involves individuals putting some money away periodically until they were able to use it for intended purposes or in times of emergency.

It is most of these ‘susu’ companies that have now become microfinance companies that lend money to small and medium enterprises (SMEs).

However, it seems the Bank of Ghana (BoG), which has oversight responsibility over the microfinance companies and, indeed, has created a department specifically for them, has lost its control over the companies, leading to failed endeavours.

 

We see the confusion brought about by companies such as R5 and Pyram in the not-too-distant past playing out again, except that this time the boiling point is not Accra but the Brong Ahafo Region, where most of the microfinance companies have been found wanting. 

In the most recent case involving unsatisfied patrons, more than 100 aggrieved customers of some of the companies in Berekum in the Brong Ahafo Region went on a peaceful demonstration to demand the payment of the deposits they had with the companies and gave a two-week ultimatum to the BoG to ensure that the money they had invested in the microfinance institutions was paid back.

The boiling points in the region include Sunyani, Nkoranza, Techiman and Berekum and we urge the BoG to step up its efforts to deal with the issue once and for all.

We laud the attempt by the BoG to ensure some sanity in the banking sector by not only closing down 12 microfinance companies in the Brong Ahafo Region but also revoking the operating licences of 70 of those companies across the country for failing to meet the requirements needed for the licence.

One such company which has been in the eye of the storm is DKM Microfinance Company, which has had its premises and property ransacked by affected depositors, including farmers, pensioners and traders.

These affected groups would definitely need their money and the Daily Graphic believes it is incumbent on the BoG to retrieve the money for the affected persons.

We, nonetheless, caution the public not to be greedy for quick gain, else they will always fall prey to scams that always appear real in the beginning but always fail when many people sign onto them and, worse still, the operators go underground and are never seen again.

We urge the BoG to protect the public from such scams by being more vigilant in its supervision over such companies and putting in place measures to ensure that depositors’ money locked up is always retrieved.