BoG sanitizes microfinance sector by ‘naming and shaming’

The Bank of Ghana’s decision to name and caution the public from doing business with all institutions operating illegally as microfinance companies should culminate in sanitizing the sector.

At least this is the optimism by the Ghana Association of Microfinance Companies (GAMC).

The Association is also confident the move will restore confidence in the industry.

Reports of people losing their investments to such unauthorized institutions are increasing despite efforts to clamp them down.

The optimism follows recent alerts from the Bank of Ghana cautioning the public against illegally operating microfinance institutions.

For this year (2017) alone, the Bank of Ghana has issued publications warning the public against doing business with at least five entities for operating illegally.

They include; ponzi scheme; MMM, Hebron Financial Services, Money-doubler, Agro Development Fund Services Limited with the latest being Oboanipa Ventures Limited.

In each of these cases, the central bank argued that their operations flouted provisions of the Banks and Specialized Deposit-Taking Institutions Act.

But the Executive Secretary of the Ghana Association of Microfinance Companies, Joseph Donkor tells Citi Business News the actions taken by the Bank of Ghana gives confidence of ridding the system off all undeserving institutions.

“When the MMM issue came up, two of the people who were behind their operations were picked up because the issue was a widely circulated one which also involved the EOCO and the Financial Intelligence Centre. So I know that it attracted the needed attention,” he said.

Already, government through the Registrar General’s Department, is repaying the over 70, 000 victims of DKM Microfinance Company.

Yet, customers of other closed down schemes like God is Love Fun Club are yet to be reimbursed their due.

Despite this, Mr. Joseph Donkor is confident the implementation of the Depositors Insurance Act will protect affected victims from any adverse impact going forward.

“There are a whole lot of processes that we go through to ensure that depositors do not suffer…with the introduction of the Depositors’ Protection Bill, a lot is being done to have insurance systems in place to handle cases of people falling victims to these kind of illegal acts.”

As at October 17th, 2017 checks by Citibusinessnews.com at the BoG’s website showed that the central bank had licensed 346 microfinance companies; 72 Specialized Deposit taking Institutions, 140 Rural Banks as well as 51 Money Lending Companies.