Illegal micro finance companies to be exposed
The Bank of Ghana (BoG) in collaboration with National Security will soon embark on an exercise to clamp down on defaulting micro finance companies (MFCs) in the country.
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This is to bring sanity into the operations of the MFCs and put them on their toes, especially the near-collapsed ones.
Most of these defaulting MFCs which have in their possession savings (“Susu”) accounts and investment packages from their clients have “taken to their heels” and denied their customers access to their funds.
In view of this, both the BoG and National Security will soon publish the names of about 25 MFCs that are operating illegally.
An Assistant Director at the BoG, Mr K. S. Osei-Bonsu, made this known at the opening of the 4th Financial Literacy Week held in Kumasi on the theme: “Financial Literacy: Key to Secured Future”, a programme being organised by the Ministry of Finance in collaboration with financial services in Ghana.
The programme attracted students from 15 tertiary institutions in the Ashanti Region.
Mr Osei-Bonsu said one of the reasons for the collapse of MFCs in the country was the opening of more branch offices without taking into consideration the benefit analysis.
He noted that other MFCs were collapsing because they were operating without licences, with no prior approval of the central bank.
He attributed the menace to inter-borrowing between the MFCs without proper analysis of shareability, adding that infusing loanable funds into unprofitable and unsustainable activities such as huge edifices, posh vehicles and “handsome” donations without proper considerations would collapse such ventures.
Moreover, he said low submission of prudential returns to the BoG and inexperience on the part of the staff members of most MFCs were a “burden” and hence, their collapse or near-collapse.
He, however, commended the Ghana Association of Microfinance Companies (GAMC) which is able to monitor the operations of the MFCs and organise seminars quarterly with financial support from the BoG.
An officer at the Financial Stability Department of the BoG, Rev. Kwesi Twum, stressed on a Consumer Protection Regime that guarantees the rights of consumers or customers and also offers them better terms and conditions.