Lack of proper supervision affects micro-finance

The Managing Director of Africa Trust Micro Finance, Nana Agyenim Boateng, has attributed the myriad of problems facing micro-finance companies partly to the lack of proper supervision.

He said the problem had come up because there was no impartial apex body.

He explained that just as rural banks had ARP Apex Bank, an independent body supervising their work aside Bank of Ghana, it was high time non-practitioners who were neutral in the micro-finance industry were brought together to supervise their activities.

Nana Boateng made the call during a public lecture to mark the five-year activities of the African Trust which started at Juaben in the Ejisu-Juabeng Municipal Assembly in the Ashanti Region.

The MD said the current situation where some owners make up the executive body of the apex body could be likened to regulators being players at the same time.

He noted that “for us to salvage this unfortunate situation, practitioners and regulators have to come together to strengthen the apex body of the micro-finance industry”.

He noted that the industry was in a revolution, just as the rural banks experienced similar challenges in the 1990s and was salvaged by its apex bank.

Nana Boateng said the company had computerised its operations in all the five branches and instead of opening new branches, it had established a website where customers could interact and deal with the bank at the touch of a button on its website,

He expressed worry that some customers who took loans from micro-finance companies turned round and peddled rumours that those companies had run out of cash, leading to most of the bank customers rushing to withdraw their savings.

He said micro-finance companies has two sources of funding, mobilisation and loans from the traditional banks, but these banks had the believe that the micro-finance industry had a high risk exposure and that they were not willing to lend to the sector.

Nana Boateng said those traditional banks willing to offer credit charged as high as 40 per cent interest rate, including all charges and commitment, and were also required to deposit 30 per cent of the facility into an account before the loans were granted.

He mentioned some of the problems as greedy customers who wanted high rates for their deposit and some companies also set unrealistic rates for their customers, leading to their collapse.

The representative of the Juabeng Hene, Nana Mmentiahyenfuo Hene, commended the bank for renovating basic schools in the area and its plan to renovate one of such schools in the area each year.

He appealed to the staff to be honest and responsible in dealing with their clients.

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