George Nkansah Afful, the Chief Executive Officer of Unicorn Happy Investment (UHI) — a micro-finance institution, has urged the Bank of Ghana (BoG) to lend to registered micro-finance companies at lower rates to enable them on-lend at competitive rates to the micro, small and medium enterprises.
The special dispensation, he argues, would go a long way to further boost the micro, small and medium scale businesses in the country and create much-needed employment.
The central bank has already licenced over 340 microfinance companies, while close to 600 applications for licences are pending.
Regulating the high number of microfinance companies has been a tough challenge for the central bank, which recently created the Other Financial Institutions Supervisory Department to deal specifically with this rapidly-expanding financial sub-sector.
He said the microfinance industry is a high risk area and with its proliferation making it more challenging, as some continue to fold up, it would be prudent for banks, finance houses and BoG to intervene by creating affordable access to funds for microfinance to help reduce their lending rates.
Apart from concerns over their “outrageous” lending rates, microfinance companies have many times been a conduit for the perpetration of fraud through Ponzi schemes that lure depositors with absurdly lucrative investment interest rates.
The central bank in 2012 revised the regulatory capital requirement for MFIs to at least GH¢500,000 for companies with one branch, while additional branches are subject to further capitalisation.
Speaking at the fifth anniversary of UHI in Koforidua, Mr. Nkansah said: “It is very challenging to access funds from the open market, and when you do the cost thereof does not give you the luxury of relaxing your lending rates. This results in micro-finance being seen as charging relatively higher interest rates on loans”.
According to him, the industry has its own internal difficulties which mainly have to do with clients defaulting; but he was confident that the micro-finance industry has come to stay and is augmenting government efforts of creating employment and individual empowerment.
He said the operation of the company was modelled to achieve the underlying principles for which it was established — that is creating financial discipline and employment.
He said the company holds the view that if it is able to inculcate the culture of savings in all its clients, it will empower them financially in the near-future and make them better persons.
“As such, our products and services are tailored toward this direction. Not only are we deferring our client’s gratification by making them save, we give them attractive interest on their savings, competitive interest rate on their fixed deposits, and also grant them soft loans for their businesses coupled with business advisory services.”
He said with the employment rate also on the ascendency, UHI has positioned itself to absorb over 400 people who otherwise would have added to the unemployment statistics.
In addition, he said with over 30,000 customers and average withdrawal frequency of twice a month, one cannot over-ride the company’s effort of creating financial discipline in the country.
He said UHI will continue to give its teeming customers the best of services they could ever get, and will continue to support the people to have access to their funds anytime they call for it.