Micro-finance sector has bright future
A financial expert, Mr Yoofi Grant, who is a retired Executive Director of Data Bank, has urged micro-finance institutions in the country to position themselves by putting in place an elaborate and systematic plan of action that will enable them to take advantage of the enormous business potential in the informal sector.
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He said, failure to do so would mean a critical segment of the economy, which involves the country’s biggest business constituency made up of small and medium- scale enterprises, would not be adequately served by the traditional banking institutions.
Mr Grant made the proposal at the Third Southern Sector Breakfast Forum for Directors and Chief Executives of the Ghana Association of Micro-finance Companies (GAMC).
The Breakfast Forum, which is held twice in a year, was instituted by the national board of GAMC to periodically brief chief executive officers and directors of member companies on steps being taken by the association to improve standards, obtain feedback and also receive advice from experts.
Speaking on the theme for the occasion “Grow to greatness: Smart Growth for Private Businesses”, Mr Yoofi Grant said in view of the erratic performance of the country’s economic indicators, it was necessary that businesses forecasted and planned their operations very well if they were to succeed.
He said micro-finance institutions (MFIs) must innovate and find the right balance between providing a financial service that would improve people’s lives and being viable commercially.
“If you have a business that is not improving people’s lot, the business will fail. However, insofar as you have a product that someone needs you are likely to stay in business,” he said.
He said there was a bright future ahead for MFIs because they served the majority of Ghanaian businesses which were small and were not served by the main financial institutions. But, he said, they would only get it right if they put in place the right governance structures and also provided correct data to mark their progress.
The Head of the Micro-finance Division at the Bank of Ghana, Dr Gyimah-Larbi, cautioned MFIs to be mindful of returns they submitted to the Bank of Ghana. He said in many of the reports received by his outfit, there were instances of inaccuracies, inconsistencies and omissions in some of the returns.
“These were not allowing the Bank of Ghana to build a good data base for the sector,” he said.
The Capacity Building Fund Manager of the Rural and Financial Agriculture Programme (RAFiP), Mr Joe Appea, said a micro-finance newsletter was being set up to highlight achievements in the sector. He, therefore, urged practitioners to endeavour to contribute articles to the paper when it becomes operational.
The National Board Chairman of GAMC, Mr Collins Amponsah, said the meeting was very instructive as participants were encouraged to strengthen their weak points, including the demand for members to revamp the governance structure of their companies, apply the right risk procedures, ensure enforcement of regulations and strict liquidity procedures among others.
Story by Jojo Sam