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
Sunday, May 22, 2011
SSNIT informal sector Fund; Tool for revenue generation
THE Managing Director of the Social Security and National Insurance Trust (SSNIT) Informal Sector Fund (SISF), Dr Francis Sapara-Grant, has stated that the operations of the fund points to the fact that the fund is an effective revenue mobilisation mechanism towards national development.
He said the minimal withdrawal rates recorded by the fund since it started mobilising contributions from members on a voluntary basis has re-enforced suggestions that the fund could be an effective tool for national development.
The fund which started operations as an independent body in 2008 to address the low patronage by informal sector workers towards SSNIT contributions has so far recorded an 18.4 per cent withdrawals, a rate the managing director observed had re-enforced thoughts from its stakeholders that “the fund is an important tool for savings towards the development of the national economy.”
Dr Sapara-Grant made the observation when a five-member delegation from Tanzania led by the country’s Labour and Employment Minister, Ms Gaudentia M Kabaka, paid a working visit to the fund’s head office in Accra.
Taking the Tanzanian delegation through the operations and modalities of the fund, Dr Sapara-Grant said the operations of the SISF was aimed at addressing the low patronage of the informal sector towards the SSNIT pension scheme.
According to him, a SSNIT sponsored research on the causes of the low patronage of the pension scheme revealed that “most informal sector workers were unwilling to join the scheme because they could not have access to their finance except they were on retirement.
As a result, Dr Sapara-Grant said SISF’s operations have been made “flexible and easy to access and join as a way of getting more of the country’s large informal sector workers to register.”
As part of that flexibility, the managing director said that members of the fund were permitted to use their voluntary contributions as mortgage towards acquiring residential homes, adding that “the fund can also give contributors loans, upon request.”
He was of the view that the fund needed government and other key stakeholders’ sponsorship to enable it “bring on board most of the people in the informal sector and in the process save money that can be used for economic development.”
“If SSNIT, upon its current coverage of 10 per cent of the country’s populace, can do all that it has done, then you can imagine what would happen if SISF is able to get a large chunk of the informal sector registered and contributing.”
The fund currently has a membership of about 85,000, “a tip of the iceberg” when compared to the over 80 per cent of the country’s workforce that are said to be engaged in the informal sector.”
The Tanzanian Labour and Employment Minister and officials from the country’s Social Security Regulatory Authority (SSRA) are in the country to understudy the Ghanaian pension scheme as the authority seeks to improve on its operations.
Ms Gaudentia Kabaka later told the Daily Graphic that “it was interesting to hear how Ghana runs its social security scheme and we hope to replicate some of the experiences shared when we go back.”
He said the minimal withdrawal rates recorded by the fund since it started mobilising contributions from members on a voluntary basis has re-enforced suggestions that the fund could be an effective tool for national development.
The fund which started operations as an independent body in 2008 to address the low patronage by informal sector workers towards SSNIT contributions has so far recorded an 18.4 per cent withdrawals, a rate the managing director observed had re-enforced thoughts from its stakeholders that “the fund is an important tool for savings towards the development of the national economy.”
Dr Sapara-Grant made the observation when a five-member delegation from Tanzania led by the country’s Labour and Employment Minister, Ms Gaudentia M Kabaka, paid a working visit to the fund’s head office in Accra.
 |
| DR Sapara-Grant giving a soft copy of the presentation to Ms Guadentia M Kabaka |
Taking the Tanzanian delegation through the operations and modalities of the fund, Dr Sapara-Grant said the operations of the SISF was aimed at addressing the low patronage of the informal sector towards the SSNIT pension scheme.
According to him, a SSNIT sponsored research on the causes of the low patronage of the pension scheme revealed that “most informal sector workers were unwilling to join the scheme because they could not have access to their finance except they were on retirement.
As a result, Dr Sapara-Grant said SISF’s operations have been made “flexible and easy to access and join as a way of getting more of the country’s large informal sector workers to register.”
As part of that flexibility, the managing director said that members of the fund were permitted to use their voluntary contributions as mortgage towards acquiring residential homes, adding that “the fund can also give contributors loans, upon request.”
He was of the view that the fund needed government and other key stakeholders’ sponsorship to enable it “bring on board most of the people in the informal sector and in the process save money that can be used for economic development.”
“If SSNIT, upon its current coverage of 10 per cent of the country’s populace, can do all that it has done, then you can imagine what would happen if SISF is able to get a large chunk of the informal sector registered and contributing.”
The fund currently has a membership of about 85,000, “a tip of the iceberg” when compared to the over 80 per cent of the country’s workforce that are said to be engaged in the informal sector.”
The Tanzanian Labour and Employment Minister and officials from the country’s Social Security Regulatory Authority (SSRA) are in the country to understudy the Ghanaian pension scheme as the authority seeks to improve on its operations.
Ms Gaudentia Kabaka later told the Daily Graphic that “it was interesting to hear how Ghana runs its social security scheme and we hope to replicate some of the experiences shared when we go back.”
Thursday, May 19, 2011
Cal Bank explores ways to recapitalise
CAL BANK Limited, one of the indigenous banks operating in the country says it is not ruling out the possbilities of a meager or an acquisition as it strategises to meet the Central Bank’s new minimum capitalisation of GH¢60 million before the end of 2012.
Managing Director of the bank, Mr Frank Brako Adu Jnr, will, however not say which financial institution the bank would be meaging with or would be acquired by except to “those are part of a wide range of options that we are considering to meet that goal of the recapitalisation.”
In an interview with the Daily Graphic after the bank took its turn at the Ghana Stock Exchange's "Facts behind the Figures" in Accra, the Mr Adu said the bank was at the moment aiming at meeting the new capital requirement on or before the deadline of 2012 and "whatever strategy we would use to meet that requirement, the bank is open to them."
"We are not just looking at one means of raising the capital but any means that would lead us to our aim and also make us deliver value to our shareholders; be it mergers, acquisitions, amalgamations, a rights issue, private placement or whatever, we are open to it," Mr Adu noted.
The BoG itself has been vocal on the need for local banks to consider mergers or inter-bank acquisitions as ways of raising enough capital to meet it’s revised capital base requirement of Gh¢60 million by the close of 2012.
Cal Bank in 2009 undertook a rights issue as it sought to raise an initial amount of GH¢30 million to enable it increase the bank’s stated capital to GH¢100 million and thus meet the BoG’s new GH¢60 million capital base requirement.
The issue was, however, under subscribed, with only GH¢13.91 million realised and "the allotment of any shares unsubscribed under the rights issue" as was authorised by the bank’s board of directors had also yielded only GH¢2.1million, prompting the bank to now explore other means of raising the said capital before the 2012 deadline.
The Chairman of the bank’s Board of Director’s, Mr Paarock A VanPercy, last two months told its shareholders during the bank's AGM in Accra that the bank had opened discussions with development finance institutions including Proparco and DEG as a way of shoring up its capital to the GH¢100 million.
On the bank's performance in the first four months of this year, Mr Frank Adu Jnr said the bank's profit after tax increased by 28.53 per cent, with its Non Performing Loans (NPLs) dipping to 11.86 per cent compared to 12.32 per cent in 2010.
He added that the bank expected a 35 per cent growth in its loans within the year, noting that "though some may think that it is not aggressive enough, our past experience with NPLs has shown that in pursuing loans, you have to tread cautiously, otherwise, you would give it back."
Managing Director of the bank, Mr Frank Brako Adu Jnr, will, however not say which financial institution the bank would be meaging with or would be acquired by except to “those are part of a wide range of options that we are considering to meet that goal of the recapitalisation.”
In an interview with the Daily Graphic after the bank took its turn at the Ghana Stock Exchange's "Facts behind the Figures" in Accra, the Mr Adu said the bank was at the moment aiming at meeting the new capital requirement on or before the deadline of 2012 and "whatever strategy we would use to meet that requirement, the bank is open to them."
"We are not just looking at one means of raising the capital but any means that would lead us to our aim and also make us deliver value to our shareholders; be it mergers, acquisitions, amalgamations, a rights issue, private placement or whatever, we are open to it," Mr Adu noted.
The BoG itself has been vocal on the need for local banks to consider mergers or inter-bank acquisitions as ways of raising enough capital to meet it’s revised capital base requirement of Gh¢60 million by the close of 2012.
Cal Bank in 2009 undertook a rights issue as it sought to raise an initial amount of GH¢30 million to enable it increase the bank’s stated capital to GH¢100 million and thus meet the BoG’s new GH¢60 million capital base requirement.
The issue was, however, under subscribed, with only GH¢13.91 million realised and "the allotment of any shares unsubscribed under the rights issue" as was authorised by the bank’s board of directors had also yielded only GH¢2.1million, prompting the bank to now explore other means of raising the said capital before the 2012 deadline.
The Chairman of the bank’s Board of Director’s, Mr Paarock A VanPercy, last two months told its shareholders during the bank's AGM in Accra that the bank had opened discussions with development finance institutions including Proparco and DEG as a way of shoring up its capital to the GH¢100 million.
On the bank's performance in the first four months of this year, Mr Frank Adu Jnr said the bank's profit after tax increased by 28.53 per cent, with its Non Performing Loans (NPLs) dipping to 11.86 per cent compared to 12.32 per cent in 2010.
He added that the bank expected a 35 per cent growth in its loans within the year, noting that "though some may think that it is not aggressive enough, our past experience with NPLs has shown that in pursuing loans, you have to tread cautiously, otherwise, you would give it back."
Inflation and people’s pocket
As the Consumer Price Index (CPI) goes down it is expected that the purchasing power of people will increase. But is that really the case? Asks Maxwell Adombila Akalaare
ANNUALISED inflation for the month of April dipped by 0.11 per cent from its previous month’s figure of 9.13 per cent to 9.02 per cent in the month under review.
The fall, the second in a row after an increase in the ex-pump prices of some petroleum products in the country reversed an 18-month downward rate, has re-affirmed earlier thoughts from policy makers and some analysts, especially the government’s economic handlers that the January and February rise in the rate was only a blip due to the fuel price hike.
The Government Statistician, Dr Grace Bediako, who announced the figures noted that the food and the non-alcoholic beverages group, which contribute a 44.91 per cent weight on the overall basket, helped to push the rate downward.
According to her, while the food and non-alcoholic group had a 0.52 per cent point decline, the non-food group recorded a 0.16 per cent increase.”
Dr Bediako attributed the 0.52 per cent decline in the rate in the food and non-alcoholic beverages group to “the present stable exchange rate and the bumper harvest experienced last year.”
INFLATION IN THE REGIONS
The Greater Accra Region again recorded the highest inflation rate of 12.31 per cent, followed by 11.58 per cent for the Upper East and West regions.
The Volta Region, however, recorded the least rate of 5.24 per cent, followed by the Northern Region, which recorded 6.83 per cent just a 0.01 per cent difference from the Eastern region's figure.
APRIL INFLATION DOWN, SO WHAT?
Inflation in basic terms measures the rate at which prices of goods and services in the country changes, so that if the figure is consistently rising, then prices of goods and services are consistently increasing and that definitely is not good for the private individual, business community and the government as well. For the private individual, the family budget would have to be tightened or left loose because, a loaf of bread can sell from GH¢0.80 this week but jump to to GH¢1 come next week or two.
As for the business community, planning a business decision becomes a game of chance because the folks are not quite sure of the price of the company's raw materials come next week.
And for the government, consistent price surges will mean a distress populace seeking extra money to offset the increases not to talk of its reeling effects on other macro-economic indicators and government policies and decision. A declining inflation rate leads to the reverse of the above.
EFFECTS OF DECLINING INFLATION
The issue of falling inflation and "feeling it in the pocket" as running contrary has received much attention, and that could be partly due to the misconception that once the inflation rate is falling, prices of goods and services should equally be declining. In most cases, however, this has not been so.
This is because the basket that measures the year-to-year inflation on monthly basis is taken to be 100 per cent but further divided into two major groups, the non-food (which has 55.09 per cent weight) and the food and non-alcoholic group (with 44.91 per cent weight). Each of these groups has further sub-groups that individually act to determine the respective group's impact on the overall figure.
For instance, if the individual sub-groups of the non-food group records minimal price increases for the period under review, say May, while that of the food and non-alcoholic beverages group records a heavy rise, the lower average change in prices recorded by the non-food group, which has a weight of 55.09 per cent, would offset the overall figure and possibly cause it to go down despite a rising prices within the other sub-group.
When this happens, and the (May) figure is announced as having gone down, ordinary Ghanaians would have every right to say "let us feel it in our pockets". But understanding the dynamics is also key.
The reverse can also happen for the figure to go up or remain unchanged.
The other reason why declining inflation may not be felt in the pocket is that even though inflation may decline, the actual situation on the ground might have been "suppressed" by the continuous fall in the prices of other sub-groups within the same group or outside.
The third reason is this caution that a downward inflation would not mean that prices of goods and services are not increasing. What it rather means is that the prices could still be rising but at a rather slower pace.
So let us take inflation to be a moving vehicle. The fact that the vehicle's speed has been slowed in traffic (inflation has dropped) does not mean that it is not moving again. What it rather means is that the vehicle (prices of goods and services) is now moving on a consistently slow pace (the prices are rising slowly.)
ANNUALISED inflation for the month of April dipped by 0.11 per cent from its previous month’s figure of 9.13 per cent to 9.02 per cent in the month under review.
The fall, the second in a row after an increase in the ex-pump prices of some petroleum products in the country reversed an 18-month downward rate, has re-affirmed earlier thoughts from policy makers and some analysts, especially the government’s economic handlers that the January and February rise in the rate was only a blip due to the fuel price hike.
The Government Statistician, Dr Grace Bediako, who announced the figures noted that the food and the non-alcoholic beverages group, which contribute a 44.91 per cent weight on the overall basket, helped to push the rate downward.
According to her, while the food and non-alcoholic group had a 0.52 per cent point decline, the non-food group recorded a 0.16 per cent increase.”
Dr Bediako attributed the 0.52 per cent decline in the rate in the food and non-alcoholic beverages group to “the present stable exchange rate and the bumper harvest experienced last year.”
INFLATION IN THE REGIONS
The Greater Accra Region again recorded the highest inflation rate of 12.31 per cent, followed by 11.58 per cent for the Upper East and West regions.
The Volta Region, however, recorded the least rate of 5.24 per cent, followed by the Northern Region, which recorded 6.83 per cent just a 0.01 per cent difference from the Eastern region's figure.
APRIL INFLATION DOWN, SO WHAT?
Inflation in basic terms measures the rate at which prices of goods and services in the country changes, so that if the figure is consistently rising, then prices of goods and services are consistently increasing and that definitely is not good for the private individual, business community and the government as well. For the private individual, the family budget would have to be tightened or left loose because, a loaf of bread can sell from GH¢0.80 this week but jump to to GH¢1 come next week or two.
As for the business community, planning a business decision becomes a game of chance because the folks are not quite sure of the price of the company's raw materials come next week.
And for the government, consistent price surges will mean a distress populace seeking extra money to offset the increases not to talk of its reeling effects on other macro-economic indicators and government policies and decision. A declining inflation rate leads to the reverse of the above.
EFFECTS OF DECLINING INFLATION
The issue of falling inflation and "feeling it in the pocket" as running contrary has received much attention, and that could be partly due to the misconception that once the inflation rate is falling, prices of goods and services should equally be declining. In most cases, however, this has not been so.
This is because the basket that measures the year-to-year inflation on monthly basis is taken to be 100 per cent but further divided into two major groups, the non-food (which has 55.09 per cent weight) and the food and non-alcoholic group (with 44.91 per cent weight). Each of these groups has further sub-groups that individually act to determine the respective group's impact on the overall figure.
For instance, if the individual sub-groups of the non-food group records minimal price increases for the period under review, say May, while that of the food and non-alcoholic beverages group records a heavy rise, the lower average change in prices recorded by the non-food group, which has a weight of 55.09 per cent, would offset the overall figure and possibly cause it to go down despite a rising prices within the other sub-group.
When this happens, and the (May) figure is announced as having gone down, ordinary Ghanaians would have every right to say "let us feel it in our pockets". But understanding the dynamics is also key.
The reverse can also happen for the figure to go up or remain unchanged.
The other reason why declining inflation may not be felt in the pocket is that even though inflation may decline, the actual situation on the ground might have been "suppressed" by the continuous fall in the prices of other sub-groups within the same group or outside.
The third reason is this caution that a downward inflation would not mean that prices of goods and services are not increasing. What it rather means is that the prices could still be rising but at a rather slower pace.
So let us take inflation to be a moving vehicle. The fact that the vehicle's speed has been slowed in traffic (inflation has dropped) does not mean that it is not moving again. What it rather means is that the vehicle (prices of goods and services) is now moving on a consistently slow pace (the prices are rising slowly.)
Subscribe to:
Posts (Atom)