The Bank of Ghana has secured GHc900 million to sanitize the country’s struggling microfinance sector.
A similar exercise that was targeted at universal banks saw the collapse of nine local banks costing the country almost GHc 11 billion.
About 705,396 depositors of distressed or collapsed microfinance companies and rural and community banks (RCBs) risk losing a total of GH¢740.5 million without some form of intervention.
The upcoming exercise for the microfinance sector is expected to be equally costly, but the Bank of Ghana admitted that the GHc 900 was still a limited intervention and needed to be approached in phases.
The Governor of the BoG, Dr Ernest Addison said: “the budgetary resources are not there to undertake an operation on the magnitude of GHc 7 billion.”
“We have just [about] GHc 1 billion. We can take care of the microfinance institutions and we need to make an assessment that we are getting from institutions like First Allied.”
Dr. Addison also noted that the overall “problem would not have been resolved by just concentrating on the microfinance part of it.”
Dr. Addison was speaking at a Monetary Policy Committee (MPC) news conference in Accra on Monday.
The clean-up of the microfinance sector is expected to begin by the end of the third quarter of 2019.
In addition, the BoG’s moves will significantly cut down the number of microfinance companies in the country.
Dr Addison appealed for time to come up with clear guidelines on the scope of the clean-up of the microfinance sector.