The Association of Micro Finance Companies (AMFC) has appealed to the Bank of Ghana (BoG) to re-categorize Micro Finance Institutions (MFIs) in the country to reduce the proposed capital requirement for micro finance companies in rural areas.
According to the association, the move will help the BoG to effectively implement the new directive to improve the microfinance industry.
The Bank of Ghana has announced April 2018 as the deadline date for micro finance companies to meet a 2 million cedis capital requirement, among other conditions.
Speaking to Citi Business News, the Executive Secretary of the AMFC, Joseph Donkor maintained that the association is engaging the BoG on the issue.
“We are looking at a lot of options. we also noted that some of the institutions are for example located in areas that might not need the 2 million cedis capital. For example an institution might be located in a village that is serving small customers and so may need small loans,” he argued.
“So if you put all of them in the same category and want them to have two million cedis, if you are not careful some of those institutions will go out of the industry and it’s not going to help anybody because of the services they are providing to the economic poor,” he warned.
Mr. Donkor stated that it will be prudent for the central bank to consider the decision since microfinance companies are a major source of funds for rural people.
“So we are looking at a lot of options. I think that so far our discussion with the Bank of Ghana has been fruitful because they are also concerned about the issues in the industry,” he said.
He suggested that the central bank can demarcate areas based on the economic activities to reduce the capital limit.
“We might probably look at other areas of location consideration and also possibly categorize the institutions in the industry. Maybe, big micro finance companies, medium micro finance ,and small microfinance companies,” he suggested.
By: Lawrence Segbefia/citibusinessnews.com/Ghana