Banker Bemoans Activities Of Microfinance Companies


By Cecil Mensah

The Head of Financial Decision Support of Barclays Ghana Limited, Mr Richard Boadi has bemoaned the lack of business principles in the operations of microfinance institutions in the country

According to him, the operators of such business ventures do not adhere to laid down business principles.

He said the main reason for a chunk of these businesses collapsing is due to the non adherence to business principles in their operations.
He added that these business operators, do not do any proper analysis in arriving at the decisions in opening branches across the country.

He said all the business owners do is to use the deposits of their clients in opening branches, without reinvesting to enable them pay back when their clients want their deposits.

He said, rather what the owners do is to invest their clients deposits in their expansion drive only for the clients to come for their moneys only for the business to collapse overnight, because of the company’s indebtedness to their depositors.

He added that this it is so typical of Ghanaian businessmen to divert their capitals into other ventures without any proper analysis.
Microfinance institutions are opening branches everywhere without any plan of action has been the bane of the early collapse of these
institutions thereby creating the impression that microfinance operators are fraudsters.

Mr Boadi made this comment at a day’s workshop organized on analysis of financial statements and the Bank of Ghana’s (BoG) regulations on foreign exchange by the Institute of Economic and Financial Journalist (IFEJ) under the auspices of Ghana Association of Bankers (GAB).

”If a customer brings his or her deposits, he or she expects that anytime he or she wants the money it must be made available and failure to do so is the collapse of the majority of the microfinance companies” he said

He said when people deposit their money with such institutions they expects to be given back their money when they need it.
He said the situation is not only prevalent in the microfinance sector but in, the real estate industry too.

According to him, owners of such businesses also take money from some well- meaning individuals under the pretext of offering them houses only to use their money to purchase new lands when they have not honoured their obligations to their clients.

He said this why many Ghanaian businesses do not grow pass the generation of their owners.
On his part Kobla Yaletey, an official at the foreign treasury of Barclays Bank said the directives by the central bank will correct the anomalies in the banking industry in relation to the use of foreign.

He said the BoG’s directives will correct the situation and forced banks to sell their Dollars to Ghanaians rather than exporting it abroad.
Mr Settor Amediku, an Economist and Financial stability officer at the BoG said the directives by the central bank are nothing new.

He said the new thing about the directives now is that the central bank is enjoying massive support from the Ministry of Justice and Attorney-General, the Economic and Organized Crime Office (EOCO) as well as the tremendous support from the President Mr John Dramani Mahama to sanction and prosecute defaulting banks and institutions

He said all banks are now directed to fully adhere to the provisions of the Foreign Exchange Act or risk being prosecuted or their license revoked.

Mr D.K. Mensah, the Chief Executive of Ghana Association of Bankers(GAB) urged participants to endeavour to do a good job in writing about the banking industry and properly educate the general public on issues affecting the industry.

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