Microfinance network secures $200m loan to support low-income earners
The Ghana Microfinance Institutions Network (GHAMFIN) has secured a $200-million credit facility from the African Export Import Bank (Afreximbank) to on-lend to their customers, mainly petty traders and low-income earners.
The facility targets petty traders, individuals in the agricultural sector, including farmers and those wishing to pursue higher education.
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Other beneficiaries of the facility include the micro, small and medium enterprises (MSMEs) sector in the country.
The Executive Director of GHAMFIN, Yaw Gyamfi, who made this known at the 13th Annual General Meeting (AGM) of Microfinance Companies Association of Ghana (MCAG) in Accra yesterday explained that the interest rates on the loans to be granted the beneficiaries were yet to be finalised.
The AGM was on the theme: “Building partnerships and synergies to strengthen the micro-credit sector".
Mr Gyamfi indicated that GHAMFIN members, made up of such associations as MCAG, savings and loans institutions, microfinance companies, credit unions, financial non-governmental organisations and Susu groups, had a client base of about 15.5 million people.
He expressed the hope that when the facility was operationalised, a significant number of the clients in the non-bank financial sector would be able to access the loans at affordable interest rates.
Mr Gyamfi stated that as part of the processes, “we are not looking at commercial banks and individuals with higher requirements”.
He said the credit facility would be rolled out as soon as a profile of a good number of beneficiary institutions were created.
The Executive Director of GHAMFIN explained that for now there was no target for the number of beneficiary customers because “once you set a target and you are not able to meet it will look as if you are not doing the right thing".
He stated that the credit facility was one of the strategies to help revive economies in selected countries in Africa after the COVID-19 pandemic.
Performance
The Board Chairman, Wilberforce Ofori, indicated that although the global economy had plummeted, the MCAG posted a “solid financial performance in 2021”.
He said the accumulated funds as of the end of 2021 amounted to GH¢1.88 million with actual revenue within the same period at GH¢1.149 million, compared to the budgeted revenue of GH¢1.36 million.
Mr Ofori revealed that the key revenue items were subscriptions, licence and licence processing fees, membership registration and training fees.
Total expenditure, he further stated, amounted to GH¢780,340, as compared to a budgeted expenditure of GH¢1.24 million.
The Executive Director of MCAG, Ebenezer Quartey, for his part, stated that the association’s “unswerving devotion to the economically active poor, MSMEs and the financial inclusion agenda endeared it to well-meaning institutions”.
Resilience
The Managing Director of the Pan-African Savings and Loans Limited, Emelia A. Atta-Fynn, said it was important for micro-credit institutions to form partnerships in order for them to become resilient to global economic shocks.
She explained that because micro credit institutions were not deposit-taking institutions, it was important for such institutions to partner deposit-taking institutions to enable them to receive funding to support their “underbanked customers”.
“The ability of institutions to strengthen their engagement with external parties and to form strategic alliances will become increasingly important to their survival,” Ms Atta-Fynn noted.
Individual lenders
The Head of Other Financial Institutions Supervision Department of the Bank of Ghana (BoG), Yaw Sarpong, in a speech read on his behalf, said the BoG saw MCAG as a partner in the supervision of micro-credit companies.
To ensure compliance with the various laws and directives governing the operations of the sub-sector, the BoG in collaboration with the MCAG, has started on-site examination of individual money lenders.
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