The Head of Financial Sector Division of Ministry of Finance, Joseph D. Chognuru, has called on microfinance institutions to see the rapid growth of the sector as a leverage to help improve the country’s financial inclusion and literacy levels.
He said financial inclusion has become critical as a means to improving the livelihoods as well as strengthening the financial resilience of people in the informal economy and that microfinance firms must champion that cause.
He added that financial inclusion will provide an opportunity for the poor and vulnerable to invest and generate income to secure their future.
“Companies in the microfinance sector must work to accelerate the country’s financial inclusion agenda; indeed, financial inclusion has become as a global imperative”, he said.
Data from a recent report on the performance monitoring and benchmarking of Ghanaians MFIs in May 2014 shows an increase in industry aggregates over the period 2001- 12.
Total client’s annual growth is at compound rate of 16%, while deposits and loans grew at 23% and 26% respectively.
Similarly, the total number of clients grew from 3.5 million in 2006 to 5.5 million in 2010 and to over 6.5 million by the end of 2012.
In terms of outreach of the sector, Rural Community Banks (RCBs) have the largest coverage with 64% of the total clients; credits unions and MFIs each account for 7% of clients, with financial non- governmental organisations (FNGOs) and Susu taking three percent each.
Mr. Chognuru encouraged industry players to ensure that financial services are delivered on massive scales using appropriate IT based technologies and agency models.
“Efficient IT systems will support the development of more innovative products, tools, systems and processes which are tried, tested and up scaled.
“Ultimately, these efforts can further reduce the operational costs of microfinance institutions which make them more sustainable in the long term.
Mr. Chognuru said in an interview at this year’s annual general meeting of the Ghana Association of Microfinance Companies (GAMC) that government will intensify its financial literacy and awareness efforts to help address the low levels of financial literacy in the country.
He added that: “In the medium term, it is expected that the national financial inclusion strategy will be completed and implemented to coordinate various activities and strengthen the financial sector holistically.”
Mr. Chognuru therefore urged GAMC to complement government’s effort by taking financial literacy and education seriously for its members it will enhance their capacity to ensure effective monitoring and reduce the possibility of over indebtedness.