The hierarchy of the Money Lenders Association of Ghana (MLAG) has encouraged members of the Association to adopt credit reference bureaus as a strategic response to the high rate of loan defaults, which have caused significant losses among the lenders.

This, the National Board Chair of the Money Lenders Association of Ghana, Regina Kumi, said will help to address one of the major challenges that have bedeviled the sector in recent times.

“Honestly speaking, the major challenge members are facing is the high default rate. Also access to easy and cheap source of funding to lend to clients at reasonable rate is also a challenge. These are the two major challenges facing our members.

“At the board level, we are trying to encourage members to roll onto the credit reference bureau system, which will help to address the issue of loan defaults since we know the reference bureaus work very well in Ghana now,” she said.

Mrs. Kumi made this known to the B&FT on the sidelines of the 7th Annual General Meeting of the Money Lenders Association of Ghana in Accra where the board chair retained her position after going unopposed in the Association’s general elections to select new executive members.

The AGM, attended by a greater number of the 630-member Association was held on the theme: ‘Microfinance institutional sustainability: Key to MLAG’s financial inclusion model in Ghana.’

Mrs. Kumi explained that the theme was apt for the future of the money lending business as it will help to refocus the activities of money lending institutions at ensuring that people receive financial services which are crucial in cutting the incidence of poverty.

“To ensure that SMEs are not deprived of the needed capital to support growth, money lending institutions have to operate in such a way that they become sustainable and relevant. We have a role to play and a space to occupy in the economic recovery of this country,” she said.

She added that the sustainability of money lending institutions now relies on financial inclusion where one of the models revolve around excellent customer service and trying to reach the millions of the unbanked population in the country.

“With financial education, institutions developing the right products for their clients, the use of the right technology to enhance our operations, with each of us reporting to the credit bureaus and implementing client protection principles in our operations, others are building the needed institutional capacity and government introducing sound regulatory framework, we shall be able to build stronger and sustainable institutions to deliver financial services to every citizen in every part of the country,” she said.