Bank of Ghana (BOG) reported that 38% of the microfinance institutions operating in the country are experiencing difficulties, which translates into a debt worth GHȼ740.5 ($166 million) owed to more than 700, 000 depositors.

 “In total, it is estimated that 272 institutions in the sub-sector, representing 38.5% are at risk. This indicates that approximately GHȼ740.5 million is owed to an estimated 705,396 depositors of the distressed or folded up MFIs and RCBs,” said Ernest Addison (photo), the bank’s governor.

 The bank also indicated that the issue is due to the undercapitalization of microfinance institutions and rural community banks, as well as the weakness of their assets. It then announced that new reforms would be implemented to clean up the country’s microfinance sector.

No information was given about the way depositors’ savings will be protected. However, BOG indicated that it will no longer issue new microfinance operating licenses.

Chamberline Moko