Increase microfinance firms’ stated capital

A financial Consultant, Raymond Tandoh, has called for the upward revision of the stated capital of microfinance companies to help avert the fraudulent activities that some of them engage in.

The Kumasi-based consultant said the GH¢100,000 being paid currently as stated capital by microfinance institutions was woefully inadequate, adding that the Bank of Ghana (BOG) should raise the amount to GH¢500,000 or more.

Such a call followed the failure by the Obuasi office of Eden Microfinance Company to pay its customers huge amounts of money they had deposited with the company.

It was as a result of such a situation that the MP for Obuasi West Constituency, Kwaku Kwarteng, recently issued a seven-day ultimatum to Eden Microfinance Company at Obuasi to pay its depositors or face court action.

In an interview with CITY & BUSINESS GUIDE, Mr. Tandoh said he was fully in support of the call made by the MP.

According to him, the Eden Microfinance situation would have been resolved without any threat of court action if microfinance companies were paying huge amounts as stated capital to BoG.

Mr. Tandoh was therefore of the conviction that a significant increase in the stated capital of microfinance companies would inject sanity into their operations and flush out fraudsters.

Due to the paltry figure currently being paid as the stated capital, he observed, all manner of people, including fraudsters were taking advantage of the situation to open microfinance companies to dupe innocent people.

Mr. Tandoh was of the strongest conviction that the increase of the stated capital from GH¢100,000 to GH¢500,000 would attract credible people into the sector and help eradicate all forms of fraud in the system.