Bank of Ghana asked to allow FDIs into microfinance industry

Kumasi-based policy think-tank, Ghana Institute of Governance and Security (GIGS), is asking the Bank of Ghana to relax regulations that bar foreigners from investing in Ghana’s microfinance industry.

It says Foreign Direct Investment (FDI) is critical to sustain the operations and increase opportunities in the sector.

“The concept is a brilliant one but you realize that there are a lot of things that need to be done to strengthen the microfinance sector… so we are saying that they should not allow foreigners to come and establish new ones, but buy shares in existing ones to strengthen it,” stated David Agbee, Executive Director of GIGS.

The emerging microfinance industry has the potential to support individuals and small and medium enterprises to grow their businesses.

However, sustainability of the sector has been threatened by liquidity challenges and inadequate managerial capacity.

Mr. Agbee says the FDIs will help inject capital, fresh knowledge and technology to help save the sector from collapse.

“Beyond the strictly economic and social improvement and benefits of Foreign Direct Investment, we strongly believe it will bring hope and confidence for the sustainability of the microfinance industry and speed up the acquisition of thoroughly knowledge and technology transferring into microfinance industry,” he said.

 

The Ghana Association of Microfinance Companies (GAMC) has endorsed the proposal.

National Board Chairman, Collins Amponsah-Mensah, says the Association is already in the process of tabling the proposal before the Bank of Ghana.

“I believe that the intention of government to secure that financial sector for only Ghanaians was a very good thing but you realize that Ghanaians in themselves are not interested in equity stake in the microfinance sector. So if Ghanaians are not interested and the companies need capitalization, why not look at foreign participation”, he suggested.

 

Mr. Amponsah-Mensah however noted that any foreign participation should ensure Ghanaians hold majority shares in the business.

Story by Kofi Adu Domfeh