BOG should allow foreign investment into microfinance industry

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Ghana Institute of Governance and Security wish to strongly bring to the attention of Bank of Ghana and the Ministry of Financial and Allied Services to critically take into consideration to allow foreigners and foreign Direct Investment into the Microfinance Industry in Ghana.

Microfinance sector is an emerging industry in Ghana which is helping many individuals and small and medium enterprises to grow their businesses but what we have realized painfully is thatof late the microfinance institutions lack capital injection into their businesses, technology and experiences to prosper the sector.

Indeed, recently microfinance institutions are spread across the length and breadth of this country but lack proper systems to make them effective and, more efficient.

Clearly, there are several reports pointing to the fact that the microfinance institutions are suffering, to the extent that their customers can not have access to their savings and their fixed investment and the situation is causing anxiety and panic within our society and causing harassment to their employees. In fact, all those threats are coming upon the staff as a result of the fact that microfinance operators lack liquidity to serve their customers.

Critically, most of the microfinance is facing these difficulties as a result of multiple factors which have affected this country most was the Supreme Court matter which Ghanaian has gone through eight months in this year and the policy of stopping of Chinese involvement in the galamsey operation has triggered most of the suffering and causing panic withdrawals in the microfinance business.

Indeed, to address these situation and challenges facing microfinance industry we wish to propose to the central Bank and the Government of Ghana to convince and open the door for foreign Direct Investment , capital injection, fresh knowledge and technology to help safe the microfinance sector from collapsing soon.

Mostly appropriately, we wish to say the investment into microfinance industry and the overall benefits of foreign direct investment for developing countries’ economies especially the financial sector are well documented In fact, given the appropriate policies and preparedness by Bank of Ghana and the stakeholders for a basic level of development, involvement by foreigners will demonstrate in the microfinance sector that foreign direct investment triggers technology spilovers, assists human capital formation contributes heavily to international trade integration, of microfinance concept across the globe

Significantly, we would like to encourage Government of Ghana and Bank of Ghana that they should not entertain fear that foreigners would take over the financial market .We also want to advise the commercial banks, Rural and community banks that they should exercise patience and not be afraid that the microfinance sector is taken over all their cheap funds from the market but appreciate the fact that competitive business environment enhances enterprise development.

Most enthusiastically, it is the position of Ghana Institute of Governance and Security that should Bank of Ghana allows foreigners to buy shares into the existing microfinance institutions which will contribute to higher economic growth, andhelp alleviating of poverty in our developing country, Ghana. Moreover, beyond the strictly economic and social improvement and benefits of Foreign Direct Investment, we strongly believe it will bring hope and confidence for the sustainability of the microfinance industry and speed up the acquisition of thoroughly knowledge and technology transferring into microfinance industry. Finally, it is the aspiration of Ghana Institute of Governance and Security that, Bank of Ghana would buy into this proposal to accept foreigners to buy shares into the already registered and existingmicrofinance industry in Ghana

Executive Director, David Agbee Ghana Institute of Governance and Security www.gigsgh.org