At least 289 microfinance firms will be rendered obsolete if the Central Bank of Ghana fails to extend the deadline for the newly approved minimum capital requirement. The new law requires all microfinance to expand their capital to 2 million from 500,000 Ghanaian shillings. The government action was intended to create a more robust microfinance sector. The firms were expected to have complied with the requirement by the end of June 2018.
Out of 319 microfinance companies, about 30 of them are in good standing. However, the Ghana Microfinance Institution Network (GHAMFIN) believe that most will have met the minimum requirement by the end of June. Failure to comply with the requirement will result in mergers or shut down. Likely, the GHAMFIN had sent a proposal to the governor of the Central Bank asking an extension of the deadline up to 2022.
Most of the microfinance are unable to meet the requirement as noticed by the GHAMFIN. This trend was observed on local banks that struggled to meet the minimum capital requirement of 400 million Ghanaian shillings by the end of the year. Economist have suggested that failure by the government to extend the deadline will lead to a catastrophic blow towards SMEs and the country’s economy at large. Most of the microfinance institutions play a significant role in the country’s economy by giving customers credit thus the government need to be lenient with them.