Report

Ghana's Microfinance Sector : Challenges, Risks and Recommendations

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collection.link.77
https://openknowledge.worldbank.org/handle/10986/2185
collection.name.77
Other Financial Sector Study
dc.contributor.author
World Bank Group
dc.date.accessioned
2018-08-14T21:21:53Z
dc.date.available
2018-08-14T21:21:53Z
dc.date.issued
2016-04
dc.date.lastModified
2020-10-28T10:03:53Z
dc.description.abstract
Broadening and deepening financial inclusion in Ghana is important for ensuring inclusive growth and achieving the objectives of the Financial Sector Strategic Plan. Deeper and more inclusive financial sectors allow poor households to manage risks and smooth consumption; they provide opportunities for very micro and small enterprises to survive and grow; they can bridge geographical dispersion by providing access to savings and payment services to populations in rural and remote regions. Ghana fares well on some indicators of financial inclusion compared to other Sub-Saharan African countries, and is comparable to lower middle-income countries. However, it lacks a clear strategy for financial inclusion and development of microfinance institutions (MFIs) and other methodologies of making financial services more widely available. Microfinance - the provision of savings, credit, and other financial products to the poor - grew rapidly in Ghana during the 2000s in existing institutions, performing well by international benchmarks for MFIs and raising the percentage of the population that is financially included.5 While the universal banks have the bulk of the assets of the financial system, microfinance institutions (MFIs) reach more clients (around 8 million) through over 3,000 outlets spread throughout the country. Although not all such institutions were directly regulated by the Bank of Ghana (BoG), capacity building, oversight and monitoring support from MFI Associations and donor-supported programs helped ensure stable growth. During the late 2000s, however, new types of unregulated microfinance service providers proliferated, increasing the number of operators who lacked sufficient capacity, skills, governance, transparency, and accountability to act as responsible financial intermediaries. This posed a risk to the sector, with increasing incidents of reported fraud, insolvency, and loss of savings by low-income households. In 2011, BoG initiated measures to bring all types of MFIs under a consistent regulatory framework by issuing Guidelines for MFIs. This paper summarizes the situation and development of microfinance institutions in Ghana, reviews progress and problems in implementing the BoG regulations for MFIs, highlights current risks and challenges, and proposes strategies for mitigating risks. The analysis includes three different levels: BoG and Government of Ghana (GoG); MFIs and their associations; and the public. It is aimed at providing information on the complex issues in the microfinance sector as a basis for dialogue on concrete reforms.
en
dc.identifier
http://documents.worldbank.org/curated/en/646871533059561411/Ghanas-microfinance-sector-challenges-risks-and-recommendations
dc.identifier.uri
http://hdl.handle.net/10986/30214
dc.language
English
dc.publisher
World Bank, Washington, DC
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo
dc.subject
MICROFINANCE
dc.subject
REGULATION
dc.subject
BANKING
dc.subject
MONEY LENDERS
dc.subject
NGOs
dc.subject
FINANCIAL CONSUMER PROTECTION
dc.subject
LEGAL FRAMEWORK
dc.subject
FINANCIAL INCLUSION
dc.title
Ghana's Microfinance Sector
en
dc.title.subtitle
Challenges, Risks and Recommendations
en
dc.type
Report
en
okr.crossref.title
Ghana's Microfinance Sector
okr.date.disclosure
2018-07-31
okr.doctype
Economic & Sector Work :: Other Financial Sector Study
okr.doctype
Economic & Sector Work
okr.docurl
http://documents.worldbank.org/curated/en/646871533059561411/Ghanas-microfinance-sector-challenges-risks-and-recommendations
okr.googlescholar.linkpresent
yes
okr.identifier.externaldocumentum
090224b085e2e01e_1_0
okr.identifier.internaldocumentum
30315575
okr.identifier.report
129098
okr.imported
true
en
okr.language.supported
en
okr.pdfurl
http://documents.worldbank.org/curated/en/646871533059561411/pdf/128098-WP-P151845-Ghana-Microfinance-Sector-Note-PUBLIC.pdf
en
okr.region.administrative
Africa
okr.region.country
Ghana
okr.sector
Finance
okr.topic
Finance and Financial Sector Development :: Access to Finance
okr.topic
Finance and Financial Sector Development :: Finance and Development
okr.topic
Finance and Financial Sector Development :: Financial Regulation & Supervision
okr.topic
Finance and Financial Sector Development :: Microfinance
okr.topic
Finance and Financial Sector Development :: Rural Finance
okr.topic
Rural Development :: Rural Microfinance and SMEs
okr.unit
Finance, Competitiveness and Innovation Global Practice

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