[ 2016-12-05 ]

New rules for microfinance companies good - Banking Consultant
Banking Consultant, and Head of the Osei Tutu II
Centre for Executive Education & Research, Nana
Otuo-Acheampong has expressed optimism in the new
regulations announced by the Bank of Ghana (BoG)
aimed at strengthening activities in the
microfinance industry. As part of the regulations,
the central bank has directed microfinance
companies to observe corporate governance
practices by going through approved processes to
appoint board of directors.

Speaking to Citi Business News, Nana
Otuo-Acheampong was hopeful the new regulations
will check microfinance companies to prevent a
debacle.

“The part that I’m very happy about is the
corporate governance part, because at the end of
the day, if you go through the research into the
reasons why microfinance companies have collapsed
which our institution have been doing, you will
see that most of the time it was because of poor
corporate governance,” he said.

He maintained that corporate governance structures
will ensure microfinance companies adhere to
strict rules since any deviation from the rules
will attract severe sanctions from the regulator.


“When you have good corporate governance
structures in place then it ensures the survival
of your operations and if you look at the history
of how these micro finance institutions were
formed that was their main bane, having been able
to put together a good set of board of directors
who will be able to steer the affairs of the
institutions,” he stressed.

He lauded efforts by the BoG in allocating a full
chapter to corporate governance since it will be
an anchor to maintain stability in the industry.

“If they are enforced then we can say that the
microfinance institution is doing better, at the
end of the day we need them we can do without them
, because they are providing a good service in a
niche market,” he noted.

Background

Thousands of Ghanaians have lost millions of cedis
in the past 3 years from the collapse of some
microfinance companies. Customers of DKM
Microfinance, and God is Love Fund Club, among
others misappropriated fund of customers.

The situation resulted in panic withdrawals as
customers thronged to such microfinance companies
to demand their investments.

The BoG directed that the assets of such companies
be frozen for a liquidation process to start. -

Source - Citifmonline

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