Donors shy away from financial NGOs

Dwindling donor support for Financial Non-Governmental Organizations (FNGOs) is hampering their ability to grant long-term loans to individuals and micro enterprises in less deprived areas, Spencer Badu, National Council Chair for the Ghana Association of Financial NGOs (GHASSFIN) has said.

“Our major challenge now is the dwindling support from donors. Our loans are very short-term and if we borrow from a short-term instrument, it means it becomes very difficult to pay back,” he said.

He was speaking to the B&FT on the sideline of the fifth Annual General Meeting of the Association held at Kasoa in the Central Region. The theme for this year’s meeting was: ‘Financial Inclusion: The role of Financial NGOs’.

Mr. Badu also indicated that their members do not have enough assets to use as collaterals to access loans from other sources, hence being badly affected by the situation.

He added that even though support from donors in terms of capacity building has been consistent, what the industry needs most is capital to serve the purpose for which the institutions are set up.

“Yes, the capacity building comes in but after your capacity have been built, you need the hard cash to be able to lend to the clients in the rural areas. And so, what we are saying is that we are ready, and positioning our members to be able to receive support in terms of funding to deepen financial inclusion”, he added.

The head of the association therefore appealed to government to help address the issue and develop the industry by setting up a fund where microfinance institutions can access long-term funds at marginal interest rates.

Financial NGOs, Mr. Badu argued, are the major agents of financial inclusion because they are the institutions that serve the rural poor. “We are the ones that give loans to those that really need it; those that are excluded from the mainstream financial system.”

He also advised financial NGOs that still haven’t acquired licenses to work hard at doing so, as only 11 out of 43 members association members are licensed operators so far.

Speaking in an interview with the B&FT on the sidelines of the meeting, Executive Director of the Ghana MicroFinance Institutions Network (Ghamfin), Yaw Gyamfi also admonished microfinance institutions to partner telecom operators to offer improved and convenient services to clients.

This, he said, would address the issue of lack of modern technology on the part of the microfinance companiesto offer mobile services to customers.

“Technology is quite expensive and at our level we cannot provide that kind of technology so the best thing to do is to work with the telcos themselves, leverage and have access to their platforms to use.”