News / Africa

Microfinance Services in Ghana Greeted With Hope, Concern

A woman holds Ghana's currency (File)
A woman holds Ghana's currency (File)
Joana Mantey

Microfinance, providing financial services to low-income clients, has gained popularity in Ghana in the past 20 years and has played an important role in helping the poor - especially women - improve their lives. And the number of lenders providing small, short-term loans has multiplied. Many people in Ghana have a positive view of the easy access to loans that micro credit provides. But there is also concern that without better regulation, some microfinanciers can exploit customers who need such services the most.

Microfinance companies are classified as non-bank financial institutions by the Central Bank of Ghana. Under current regulations, they can mobilize capital by accepting deposits from individuals and small business ventures. They can also give short-term loans to their customers.

One such customer is Marian Kyei, a housewife with two children. She says these companies, also known as Savings and Loans Companies, offer a vital lifeline to her and other Ghanaians.

“I need a loan; I get it in 48 hours," she said. "You want a loan from a traditional [bank] you have to bring collateral, guarantors; you’ve got to bring all kinds of sureties. So when these companies came up, people jumped on board.”

The Bank of Ghana says that growth in micro lenders is significant, from 12 such companies in 2006 to 19 in just five years.   

Liberalizing regulations has allowed this industry to grow with the need. But some here worry that without tighter oversight, fraudulent practices could increase and poor borrowers could be exploited.

Kyei says she would like to see the central bank do more than just grant licenses to micro lenders.

“I have not seen the Bank of Ghana come up with warnings to alert the public, who access these loans, to look out for specific things that will ensure that their monies are safe," she said. "Most of these businesses ask for advance cash before they can give loans. You look at the terms, it’s almost like a loan shark (fraudulent lender). Also, when people are unable to pay, what are the regulations that are in place to pay? Because like loan sharks, when people don’t pay they go through all kinds of means to get their monies back. ”

Kyei suggests the Central Bank could periodically publish names of businesses that are reputable.

Kofi Asare, a Ghanaian salaried worker, is also concerned about what he says are very high interest rates charged by microfinance companies.

“Most of them have compound interest, charging up to 10 percent every month," he said. "You can only make that much if you are doing buying and selling. But the over emphasis on buying and selling is not doing our economy any good. If those people continue that way, you encourage importation at the expense of production.”

But a microfinance manager in Accra, who asked to remain anonymous, defends his industry as good for small business and good for Ghana’s development. 

“I come from a financial institution which has a very competitive interest rate. Initially, we were charging 4 percent and over [monthly] but now, it has come down to 3.5,” he said.

He says in addition, his company also gives business advice to people taking out loans to help them use the money successfully.

The government of Ghana has adopted microfinance as one of its strategies for reducing poverty. And most economic indicators suggest it is helping.

You May Like

On Everest, Helicopters Rescue Stranded Climbers

Choppers transport some of more than 100 mountaineers trapped after deadly quake, avalanches More

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

In 2005, a Paris suburb exploded into violence after two teenagers were electrocuted as they hid from police; since then, somethings have changed, others not More

US, Japan Announce Historic Revision of Defense Cooperation Guidelines

Nations say new guidelines will be 'cornerstone for peace and security' in Asia-Pacific region while also serving as 'platform for a more stable international security environment' More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europei
X
Henry Ridgwell
April 26, 2015 10:36 PM
Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video ‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europe

Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

January’s terrorist attacks and fears of more to come are casting a spotlight on France’s neglected suburbs. Home to many immigrants, and sometimes hubs of crime, they were rocked by rioting a decade ago. Lisa Bryant visited the Paris suburb of Clichy-sous-Bois, where the 2005 violence first broke out, and has this report about what has changed and what has not.
Video

Video Gay Marriage Goes Before US Supreme Court

This week, the U.S. Supreme Court will hear arguments on whether gay people have a constitutional right to marriage. VOA’s Michael Bowman reports, the case could lead to the nationwide legalization of same-sex marriage, or a continuation of the status quo in which individual states decide whether to recognize gay unions.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.

VOA Blogs