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The Bank of Ghana (BoG) has called on microfinance institutions (MFIs) to bolster their governance structures, enhance risk management practices, and strictly adhere to the regulatory framework set forth by the central bank. This appeal aims to ensure that MFIs can better serve Ghana’s informal sector and contribute to the country’s broader financial inclusion goals.
Speaking at the 3rd Ghana Microfinance Institutions Network (GHAMFIN) Non-Bank Financial Institutions (NBFI) Dinner and Awards Night 2024, Elsie Addo Awadzi, the Second Deputy Governor of the BoG, emphasized the critical role that MFIs play in bridging the gap between formal financial services and underserved populations. In a speech delivered on her behalf, she highlighted the importance of compliance in maintaining the sector’s stability and building public trust.
“Microfinance institutions are pivotal in advancing financial inclusion. You serve as the link between formal financial services and the underserved populations. Your role in providing savings, credit, and insurance to those who need it most is crucial,” she stated. “However, with this responsibility comes the need to adhere to the regulatory framework established by the Bank of Ghana. Compliance ensures that the sector remains stable and capable of serving its clients effectively.”
Addo Awadzi also encouraged MFIs to adopt responsible lending practices and to innovate products tailored to the unique needs of their clients while ensuring their own sustainability.
In her address, she referred to the country’s FinTech sector report for the second quarter of 2024, which revealed that over 24 million mobile money accounts have been registered, with annual transaction volumes exceeding GH¢1.9 trillion. “These figures are more than just statistics; they represent millions of Ghanaians who now have access to financial services that were previously out of reach. They demonstrate the transformative power of FinTech in closing the financial inclusion gap,” she added.
However, she also noted the challenges facing the microfinance sector, including weaknesses in corporate governance, inadequate risk management, and non-compliance with regulatory requirements. These issues, she warned, have led to the insolvency of some MFIs and eroded public confidence in the sector.
Meanwhile, Ghana’s Minister of Finance, Dr. Mohammed Amin Adam, in a keynote speech read on his behalf at the event, acknowledged the significant role of NBFIs in the country’s economic development. He noted that NBFIs are crucial in supporting small and medium enterprises (SMEs) with credit, which in turn drives economic growth.
“An SME research report indicates that small and medium-sized enterprises contribute an estimated 70 percent of Ghana’s Gross Domestic Product (GDP) and account for approximately 85 percent of employment in the country’s manufacturing sector. It is therefore essential for NBFIs to assist SMEs in developing to maximize Ghana’s developmental potential,” the Minister stated.
In his welcome address, GHAMFIN’s Board Chairman, Bernard Joe Appeah, emphasized that this year’s event theme focuses on mobilizing the Network’s resources to support the government’s agenda of ensuring financial literacy among the adult population. He stressed that promoting financial inclusion can help individuals and businesses tap into new markets, expand their customer base, and drive economic activities, thereby achieving economic growth.
Appeah also highlighted the impact of NBFIs on the economy, citing reliable statistics from the end of 2023. According to him, there are 1,970 member companies with 14.7 million clients nationwide, holding a combined asset base of GH¢22.63 billion. In 2023, these companies disbursed loans totaling GH¢14.9 billion, with 46 percent going to micro, small, and medium enterprises, mostly in rural Ghana. These contributions accounted for nearly 3.8 percent of the GDP and provided direct employment for approximately 31,000 people, 38 percent of whom were women.
Yaw Gyamfi, Executive Director of GHAMFIN, while addressing the media after the event, noted that the awards program has fostered competition and improved performance within the sector, adding value to the Network’s stakeholders, clients, and the broader environment. He expressed gratitude to GHAMFIN’s board, staff, the technical committee, and industry associations for their unwavering commitment to making the event a success.
GHAMFIN serves as a network for all NBFIs and associations engaged in providing financial and non-financial services to low-income households and micro, small, and medium enterprises in Ghana. Its mandate is to advocate for policies and regulations that support the growth and sustainability of the sector. The Financial Inclusion Advocacy Centre, an international microfinance think-tank, is committed to promoting comprehensive financial inclusion worldwide.
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