‘Blame Journalists for collapse of micro finance companies’

The collapse of many micro financial institutions in the country has been attributed to negative reportage and false alarms by the media, especially radio stations.

The Managing Director of First Liberty Financial Services Limited, Odeneho Afram Brempong III, has blamed the media, particularly local radio stations for the difficulties micro finance companies are going through in the country.

According to him, a number of micro finance schemes have gone into liquidation following their inability to make payments to clients as a result of panic withdrawals by customers, leading to their eventual collapse. This, he argued, could be attributable to the false alarms sometimes raised by these radio stations.

Admitting though that management of some of the collapsed institutions failed to adopt prudent economic and financial measures to ensure their sustainability, Odeneho Afram Brempong III, who is also a traditional leader in the Brong-Ahafo region, noted that some of the situations have been due to unnecessary panic by radio stations, culminating in panic withdrawals by customers.

According to him, there is no single bank in the country which can satisfy the needs of its customers at a go and retain its liquidity, emphasizing situations where customers usually rush to micro financial institutions to withdraw their savings. He said on most occasions, the action of customers had been largely due to some media reportage or false alarm about imminent collapse of a particular micro finance firm.

“There is no way any bank can survive when all their customers decide to withdraw their savings; let’s not forget that these savings are also given out to individuals and corporate bodies as loans. It is, therefore, not possible to have all the monies sitting in the bank at any point in time to take care of withdrawals,” he emphasized.

The MD of First Liberty Financial Services is, therefore, appealing to the media to exercise high level of circumspection in reporting on matters concerning micro finance institutions in order to avoid unnecessary panic and also protect the investments of individuals who invest heavily in the scheme.

Speaking at an interaction with customers in Kumasi, Odeneho Afram Obremong III said in spite of the numerous setbacks, micro financial institutions continue to play critical role in the development of the country’s economy through their support to non-formal and small scale businesses.

He said it is not for nothing that the Bank of Ghana, through their regulations, indicated that all banking and financial institutions must retain only 30% of savings and offer the rest of the 70% as loans and credits to businesses.

“It is a fact that some owners and management of some micro finances have been very negligent in their spending and operations but that notwithstanding I also believe that some of them could have been saved from total collapse if the media blitz had been avoided”, he said, stressing that journalists must take their time and investigate allegations when they are brought to them.

First Liberty Financial Services, which has its headquarters in Sunyani in the Brong Ahafo Region, is currently in charge of three different micro finance institutions after taking over their assets and liabilities following their collapses.

The three institutions are Gift Financial Services and First Class Micro Finance in the Brong Ahafo Region, and Above All Financial Services in Kumasi.

The firm, after taking over the collapsed schemes, has spent GH¢2.6 million in payment of debts owed to customers and clients.

The interaction with customers was to reassure them of the firm’s preparedness to engage in business with them following the granting of perpetual licence by the Bank of Ghana to operate as a micro finance institution.