The country’s microfinance sector has over the past few years witnessed the dramatic proliferation of more companies. But unlike the rural banks which come under the ARB Apex Bank, and the securities market which is also under the watchful eyes of the Security and Exchange Commission (SEC), microfinance institutions are yet to get such a sub-sectorial control. Maxwell Adomila Akalaare reports on how the Microfinance and Small Loans Centre (MASLOC) of the Office of the President is hoping to take up such a role in the near future.
THE Microfinance and Small Loans Centre (MASLOC) is currently striving to, in the near future make practical its policy document status of being the apex body of microfinance institutions in the country.
Should it succeed, the centre would then be more empowered to subsequently concentrate much of its lending efforts on wholesale lending rather than spending time on its present three mandates of loaning to groups, individuals and that of other microfinance institutions.
According to the MASLOC, such a move would help regularise the activities of these institutions while helping to boost credit availability to the informal sector which continue to accommodate a large chunk of the country’s entrepreneurial community yet receives the least financial attention from banking and non-banking financial institutions nation-wide.
The Chief Executive Officer of the centre, Ms Bertha Ansah-Djan told the GRAPHIC BUSINESS that the centre was now aiming at making proper use of its policy document status as “the apex body of microfinance institutions”.
Associations such as the Ghana Association of Microfinance of Microfinance Institutions (GHAMFIN), Money Lenders Association of Ghana (MLAG) and the ‘Susu’ Collectors Association (MLAG) are currently serving as the respective umbrella bodies of their individual institutions.
The microfinance sector has for the past few years witnessed dramatic growth, but regulations, supervision and monitoring of the activities of these institutions in the country has however left much to be desired. The sector was, until 2007 legally under the control, supervision and licensing of the Criminal Investigations Department (CID) of the Ghana Police Services, a mandate many financial experts thought was not well placed and therefore not well executed by the criminal body.
The passage of the Non-bank Financial Institutions Act, 2007, Act 774 has, however, transferred that mandate of regulating and licensing these institutions which fall under the microfinance sector from the police onto the BoG. Many however think that the numerous roles of the Central Bank including regulating the country’s financial sector and commercial banks would not give it the needed time and resources to monitor and supervise the sub-sector.
The BoG had earlier on observed that a number of financial service providers, including financial NGOs, Susu companies, money lenders, and companies that come under the microfinance sector have over the past few years emerged to its keen attention.
The BoG has under the ARB Apex Regulations, LI 1826, delegated its monitoring and supervision powers to the ARB Apex Bank to monitor and supervise rural banks while the Securities and Exchange Commission (SEC) at the moment also serves as the apex body of the country’s security or the capital market. The microfinance sector is however yet to get such a sub-sectorial control delegated by the BoG.
MASLOC is therefore currently aiming at getting such a mandate that would enable it to become the umbrella body of these microfinance institutions, effectively monitor and supervise their activities and subsequently lend its funds to them for onward lending to the informal sector in general.
But that, according to the MASLOC CEO would require the passage of center’s policy document into a a law to give them full mandate to play such role.
The document, she said was currently before Cabinet “read through by all the authorities” and awaiting the relevant measures to get it passed.
Government earlier this year hinted of its readiness to restructure and re-organise the MASLOC to enable it ”effectively finance local entrepreneurs and rural agriculture.”
According to Ms Ansah-Djan, stepping up MASLOC’s wholesale lending to microfinance institutions in the near future would help boost credit access to the sector to enable it undergo the needed expansions.
With an estimated figure of 60 per cent of the nation’s workforce currently in the informal sector, the MASLOC CEOsaid “their lack of access to finance would mean a definate stall of the country’s development agenda.”
The Operations Manager of the MASLOC, Mr Enoch B. Donkoh said the Centre’s was now applying best practices of microfinance activities in its operations leading to the centre’s improved recovery rate for “new loans” which currently stands at 95 per cent.
She however said the Centre was at the moment recovering old loans that were given out before the present management team took office. Those loans, he mentioned currently stands at about GH¢40 million
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