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Thursday, July 7, 2022

MASLOC on warpath: seeks assistance from SFO


Officials of the Micro-finance and Small Loans Centre (MASLOC), which is directly under the Office of the President, are seeking the assistance of the country’s anti-graft

agency, the Serious Fraud Office (SFO), to help the centre recover more than GH¢80 million owed it by defaulting beneficiaries.

The SFO has also been tasked to impound about 300 VW Parrati vehicles from defaulting beneficiaries of the centre’s taxi scheme.

The list and details of defaulting beneficiaries have consequently been issued to the SFO and district chief executives to help trace beneficiaries, while the legal unit of MASLOC is also instituting legal action against big-time defaulters.

Management of MASLOC is also getting agents who will help it identify run-away beneficiaries and receive five per cent reward on any pesewa recovered based on the agent’s assistance.

Under the micro-finance and small loans scheme, about 300 new VW Parrati taxi cabs, worth more than GH¢15,000 each in 2007, were distributed to beneficiaries across the country to operate transport services and pay in monthly instalments.

But many of those beneficiaries, including those on the taxi scheme, are currently not on the radar of the centre’s recovery plan.

This and other unregulated spending of poverty-related funds and improper appraisal of projects before disbursements are threatening to cripple the otherwise viable programme, which is meant to remove the financial bottlenecks of small and medium-scale enterprises (SMEs).

The Chief Executive Officer of the centre, Mrs Bertha Ansah-Djan, insists that banks, especially rural banks, are still holding on to (MASLOC) funds.

Unregulated granting of poverty related funds at the centre, improper appraisal of projects before granting of facilities, granting of huge sums of loans to the managers of the fund and low recovering rate for the facilities extended to clients have virtually made the fund to go bankrupt.

The centre again is equally battling with the recovery of over GH¢800,000 of various loans which officials of the centre had allocated to themselves. It is also a fact that about 33 former and current employees of the centre are neck deep in these financial transactions that have nearly depleted what is meant to support SMEs.

According to available records these former and current employees of the centre alone granted to themselves between GH¢2,500 and GH¢70,000 to be repaid over a four-year period, which is not the normal convention for repayment of loans granted by the centre.

According to her, some monies disbursed through the banks under the small loans scheme and which could not be accessed by intended beneficiaries were still lodging with the banks. “We will soon start going after those banks that still hold our monies, especially the rural banks and other banks we do business with,” Mrs Ansah Djan warned.

“We have no choice but to go after them and we expect that as good corporate citizens, they will return our monies to us,” she said.

She alleged that “some of the banks are doing business with MASLOC funds and until they get enough profits they will not refund our monies to us.”

Mrs Ansah-Gyan said what was more worrying was lack of information and data on loan beneficiaries, which she said was making the loan recovery very difficult.

Currently the Auditor-General has begun auditing the accounts of the centre in order to plug the loop holes and know the exact amount of monies unaccounted for since the establishment of the centre in 2006.

The CEO was however convinced that, with support from government, the centre would function fully in the coming months.

“Already, we have started processing applications for loan disbursement which, will begin by the end of March this year”. “With the help we are getting from government, this organisation will not be crippled, we are going to rise to the occasion and ensure that we assist small businesses with funding so that they grow to create employment for the teeming masses of the country’s youth”, she said. “With the little we have, we can start doing something until we are able to recover about 80 per cent of our debts”.

Mrs Ansah Djan admitted the centre had fallen into the present quagmire because of the lack of application of the best business practices in its investment drive overtime.

“We have to be careful this time round, so that we do not fall into the same problem the previous administrators fell into,” she cautioned.

Among the measures she is instituting into the administration of the centre’s loan disbursement is the implementation of software that will track all applicants and beneficiaries of the centre’s facilities, while the face of the application forms had also been changed to capture more information on beneficiaries.

Employees of the centre are also undergoing training and an aptitude test to ensure that they qualify to be credit officers.

In addition to the establishment of a complete audit deportment at MASLOC, the management of the centre has also signed a Memorandum of Understanding with the various commercial banks so that those banks will have more responsibility to assess the viability of a business loan.

“This time we will concentrate on the micro enterprises schemes because we are still recovering those already disbursed that will enable us process loans for medium scale enterprises”, she said.

The Micro-finance and Small loans Centre faces the threat of imminent collapse because of its low recovery rate from previous beneficiaries, some of whom are currently on the run.

But the CEO believes, for the centre to be relevant in the contemporary age of Microfinance proliferation, her outfit had to be depoliticized.

According to the instrument establishing the centre, before a person qualifies for the highest amount of GH¢25,OOO, that person must have established a high level of credit worthiness and proven track record of good loan repayment in the previous years. Under the scheme, the maximum repayment period is up to 24 months.

However, the most common tenure of the facility is 12 months, which is applicable mainly to commerce; with one to three months moratorium, depending on the nature of the project.

Microfinance is one of the tools that the Ghana Poverty Reduction Strategy (GPRS 1 & 11) believed could act as impetus to supporting the private sector, which is seen as an engine of economic growth and stemming poverty.

Access to sustainable financial services is increasingly considered as a critical component of poverty reduction efforts.

It was therefore crucial that the government found alternative and sustainable means of providing the needed accelerated access to credit to a larger segment of the productive but vulnerable sections of the population within reasonable period.

Before the establishment of MASLOC, the government had initiated a microcredit scheme in 2001 in order to address the extremely wide credit gap between the commercial and rural banks. This was managed by various ministries, departments and agencies on the basis of their pro-poor programmes.

The scheme was later developed and named the microcredit programme and the microcredit and small scheme, which has now metamorphosed into the Microcredit and loans Centre (MASlOC).

The inauguration of the centre in 2006 was accompanied by a steady drumbeat of optimism about the scheme’s potential to lift the many poor from the doldrums of poverty.

But unfortunately this has not been the case, instead, the centre has been used as a gorgeous bride, with a glittering dowry of cash, courted by swooning politicians.

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