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

    Hope Remains for Rio Olympic Games, Despite Woes

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    IS Use of Social Media to Recruit, Radicalize Still a Top Threat to US

    Despite military gains against IS in Iraq and Syria, their internet propaganda still commands an audience; US officials see 'the most complex challenge that the federal government and industry face'

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

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

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora