The Finance Committee of Parliament is advocating the delegation of some oversight responsibilities of microfinance institutions to other Apex bodies other than the Bank of Ghana.
According to the Committee, this will strengthen the control of the over five hundred microfinance companies currently in operation in the country.
The Committee’s comment comes in the wake of growing concerns and calls for effective supervision of the microfinance sector following cases of fraud levelled against such institutions in the country.
Hundreds of customers have to bear the brunt over their locked up investments running into millions of cedis in embattled DKM Microfinance, God Is Love Fun Club among others.
The development has also prompted the need to revise Ghana’s laws on financial regulation to protect the interest of depositors and monitor the granting of licenses.
The Chairman of the Finance Committee in Parliament, James Avedzi told Citi Business News that delegating oversight responsibilities to other Apex bodies will largely contribute to cleaning the microfinance sector.
“I think that their work as microfinance institutions are going to be regulated more efficiently but again there is one thing that we noticed that the numbers of these institutions are large and for that matter we are even calling for a separate body like an Apex body that should do the monitoring of these activities because the Bank of Ghana alone cannot it is too big for the BoG to be monitoring the over 500 microfinance institutions,” he stated.
Currently, Parliament is seeking to pass three Bills that will help sanitise the financial industry in Ghana. They are; the Ghana Deposit Protection Bill, the Banks and Specialised Deposit Taking Institutions Bill as well as the Securities Industry Bill.
A report by the Finance Committee on the Bill indicated that the new Bill will expand the role of the Bank of Ghana in addressing the unlawful practices within the financial industry.
“The role of the Bank of Ghana indicated under the Banking Act, 2004 (Act 673) has been expanded under the Bill for purposes of clarity, consumer protection and an increase in the supervisory powers of the Bank of Ghana…The Committee considers this positive and hopes the BoG would take advantage of the provisions and improve on its monitory and supervisory roles in order to curb unlawful and improper banking practices emerging in the industry,” the report noted. It added, “This, the Committee believes will help protect unsuspecting clients and customers from being victims of such unlawful and improper practices.”
But a Banking Consultant and Executive Director of the Osei Tutu II Centre for Executive Education and Research, Nana Otuo Acheampong disagrees with the proposal of Parliament’s Finance Committee. He argues that the delegation of responsibility to Apex bodies will allow institutions without regulatory mandate to operate.
“I am not in favour of the Apex agencies as none of them is trained in regulations. So if the BoG is the body trained to regulate then they should employ more people, equip them and conduct the necessary supervision,” Nana Otuo Acheampong observed.
He has rather suggested that the Central bank devolves its power to its regional offices across the country.
“The Bank of Ghana as it stands now has regional offices across the country and so if they can devolve regulation to all these branches, then they will be able to regulate the microfinance institutions better than they are doing now. I know they’ve already given intention of doing that but why they have to wait until now beats one’s imagination.”