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

WHO: Anti-Ebola Efforts Should Focus on West Africa

Official says WHO is 'reasonably confident' countries bordering those hardest hit by the Ebola outbreak are not seeing the virus crossing their borders More

South Sudan Crisis Threatens Development

Economic costs and lost development opportunities in South Sudan have erased what little progress the country has made since independence in 2011 More

Ukrainian PM Warns: Russia May Try to Disrupt Sunday Poll

Arseniy Yatsenyuk orders full security mobilization for parliamentary election to prevent ‘terrorist acts’ from being carried out 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.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid