President John Mahama has hit hard at the Bank of Ghana (BoG) over its poor supervision of the country’s microfinance sector.
The BoG, the regulator of the banking industry has full supervisory role over the microfinance sector.
The sector however for years has been hit with a huge chunk of ponzi schemes as well as failed promises of high end returns on investments promised by some companies in the industry.
The Bank of Ghana recently liquidated the assets of DKM microfinance after it failed to give its customers returns it promised them.
Hundreds of Ghanaians are reported to have been affected by the actions of DKM with a majority of them losing their life savings and assets because of the development.
Addressing law makers on Thursday during his state of the nation address President John Mahama said lack of proper supervision by the Bank of Ghana must be blamed for the industry’s challenges.
“Lack of effective supervision on the part of the central bank has resulted in many cases in which microfinance companies licensed by the Bank of Ghana have breached rules of procedure that they were suppose to follow and have created pyramid schemes that eventually came down one such case is DKM. DKM with the super high interest of between 50% and 55% promised to depositors is believed to have caused a loss to its clients to the tune of 77 million Ghana cedis. Mr. Speaker many depositors have lost their life savings and their livelihoods”, he said.
He, however ,believes the passage of the deposit bill which s currently in parliament will avert any such development in the future. ”Government has a concern for the poor unsuspecting Ghanaian clients who deserve to have been protected by a more robust inspecting and supervising regime by the central bank.
“Mr. Speaker am aware that the bank of Ghana has commenced liquidation proceedings in respect of DKM and I believe that this process should be part of a comprehensive package that looks at the protection of the livelihood of especially small depositors without rewarding the reckless conduct of the microfinance company in this case DKM”, he said.
The object of this exercise should look at reimbursing legitimate customers of their original deposits, not the Alice in wonderland profits that they hope to acquire.
This initiative should be conceived in a broader solution that will permanently sanitize and restore credibility of the microfinance industry and strengthen the Bank of Ghana supervision and this august house has a role in fast tracking the passing of the Ghana deposit protection bill.
The bill will protect small depositors funds in a similar situations in the future and so that bill is coming to you and if you pass it in the future we will not have problems like DKM’.
By: Vivian Kai Lokko/citibusinessnews.com/Ghana