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Bad debts kill microfinance sector in Ghana
By Masahudu Ankiilu Kunateh
The microfinance sector in Ghana is at the verge of
collapse. This is due largely to the refusal of
beneficiaries of some microcredit schemes including the
Microfinance and Small Loans Centre (MASLOC) to pay loans
owed the sector.
In addition, the sector is being hampered by political
interference in which loans are awarded to party faithful
instead of capacity, and creditworthiness of awardees.
MASLOC is a culprit of this heinous canker.
MASLOC which is a microfinance apex body responsible for
implementing the Government of Ghana’s (GoG) microfinance
programmes targeted at reducing poverty, creating jobs and
wealth.
Though over the years MASLOC has modestly established itself
not only as a microfinance institution that disburses micro
and small loans to the identified poor in the various
sectors of the Ghanaian economy, but also provides business
advisory services, training and capacity building for small
and medium scale enterprises (SMEs) as well as collaborating
institutions, to provide them with the required skills and
knowledge in managing their businesses efficiently and
effectively. Every beneficiary of the centre is expected to
pay back the loan ranging from six months to seven years
depending on the size of the loan.
Unfortunately, since its establishment in 2006, it has not
been able to live up to the dreams and aspirations of the
government and people of Ghana.
The Chief Executive Officer (CEO) of MASLOC, Bertha
Ansah-Djan reveals that centre is currently has no money to
give to players of the small scale sector of the Ghanaian
economy.
She adds that over GH¢80 million is being owed by some
beneficiaries of the scheme for the past two years. These
include taxi drivers, farmers, market traders, animal
husbandries, and vegetable farmers.
Under the micro-finance and small loans scheme, about 300
new VW Parrati taxi cabs, worth more than GH¢15,000 each in
2007, were distributed to beneficiaries across the country
to operate transport services and pay in monthly instalments.
But many of those beneficiaries, including those on the taxi
scheme, are currently not on the radar of the centre's
recovery plan.
This and other unregulated spending of poverty-related funds
and improper appraisal of projects before disbursement of
funds are threatening to cripple the otherwise viable
programme, which is meant to remove the financial
bottlenecks of SMEs.
A senior economist, Abdul Salam Rahamani noted that
unregulated granting of poverty related funds at the centre,
improper appraisal of projects before granting of
facilities, granting of huge sums of loans to the managers
of the fund and low recovering rate for the facilities
extended to clients have virtually made the fund to go
bankrupt.
Since the assumption of office of the Mills-led government
(2009 to date) , the centre has not been able to disburse
any fund to any individual(s), and group(s). What officials
at the centre are busily doing is to recover the mountain
debt. Their efforts of recovering the state funds from the
defaulters are being hindered by the usual lack of data.
They also fear that it will lead to political vendetta.
Because, members of the opposition New Patriotic Party (NPP)
which initiated the programme will say that their men are
being harassed by the present government, according to some
officials of the sector.
Although, most Ghanaians would not like to believe that
because of the so-called political vendetta surrounding the
recovering of the debt, the government should not go all out
to recover the tax-payer’s money from these selfish
Ghanaians.
Some beneficiaries of the centre say the loans they got from
the centre were put into their businesses. But they could
not make profit to pay back the centre. A visit to Dodowa,
about 25 kilometres from Accra,
to speak to some beneficiaries of the centre who are
investing their money into poultry farming,
found that these borrowers were
prepared to pay for the loan.
But, Nii Lartey, the manager of the farm pleaded with the
centre, saying “we are yet to make profit from the loan”,
and also called for extension of the expiry date of the loan
(next month). When quizzed whether he will pay the
loan to the centre, Nii Larty said
it depends on the market dynamics. “If the market is fine I
will pay but if it is not fine, I will also behave
like the thousands of others who refused to pay”.
Another beneficiary, 31year-old taxi driver said he used the
loan to purchase a passenger bus, but unfortunately the bus
crashed completely in an accident. “So, am not prepare to
pay for the bus which crashed”.
However, the CEO of the centre cautioned them to pay the
loans or face court, revealing that: “We are engaging the
Bureau of the National Investigations (BNI) and Criminal
Investigations Department (CID) of the Ghana Police Service
to retrieve the loans”.
Microcredit facilities in some countries like India,
Indonesia and Malaysia have contributed tremendously to the
reduction of poverty. But in our part of the Ghana,
little can be said about its impact.
Masahudu Ankiilu Kunateh
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