Microfinance companies to be hit by mergers and acquisitions

Ghana’s microfinance industry is expected to be hit by mergers and acquisitions as the regulator demands recapitalization of companies in the sector.

The Bank of Ghana wants to microfinance firms to increase their capitalization from the current Gh100,000 to Gh250,000 by June 2015 – this should further go up to Gh500,000 or more in 2016.

There are concerns some companies may be challenged in meeting the requirement and the deadline.

Businesses operating in the sector would have to explore available options if they are to survive.

The Ghana Association of Microfinance Companies (GAMC) says there are arrangements to engage the regulator in managing the process.

National Chairman, Collins Amponsah Mensah however acknowledged the directive would help build stronger institutions, whilst instilling discipline and sanity in the industry.

According to him, members are encouraged to open up for mergers and acquisitions.

“I’m very hopeful that as we go forward, a lot more of our members will be coming together to form stronger institutions and in that case be able to raise the capital that is expected to be able to run this kind of business,” said the GAMC Chair.

Mr. Amponsah Mensah also believes there are opportunities for the public in invest in the industry.

“People who want to even start new microfinance institution should rather be looking at the possibility of acquiring equity in existing ones or even acquisition,” he noted.

The Bank of Ghana has also initiated action to flush out firms operating without license – names of companies which are not under regulation have been published in the dailies.

Mr. Amponsah Mensah has endorsed the exercise, stating that the savings public is getting increasingly discerning in entrusting their funds with an institution.

Story by Kofi Adu Domfeh