GNCCI worries about growing number of bankrupt financial institutions

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The Ghana Chamber of Commerce and Industry (GNCCI) is worried about the growing number of failed financial institutions.

According to a statement by GNCCI, the demise of these companies raises crucial questions about operational resilience and "our collective effort to create and help Ghanaian companies participate in the inclusive growth agenda with improved collective efficiency".

The statement signed by the President of the Ghana Chamber of Commerce and Industry, Nana, Dr. Appiagyei Dankawoso I, commended the "BoG for the measures taken to revoke the licenses of these insolvent companies and to release government funds, given the imminent threat they represent. stability of the financial system, depositors' funds and small businesses. "

Read the full statement below:
Strengthening the non-banking sector: a shared responsibility
On May 31, 2019, the Bank of Ghana (BG) revoked the licenses of 347 insolvent microfinance companies. This action is the second phase of ongoing reforms aimed at cleaning up the financial sector with a view to improving operational resilience and confidence in the system. The release of 900 million GHS by the government should allow the receiver to pay depositors after validation of claims.

As the representative voice of the business community, the Ghana Chamber of Commerce and Industry (GNCCI) congratulates the BoG for the measures taken to revoke the licenses of these insolvent companies and to release government funds, taking into account of the imminent threat they pose to the stability of the country. the financial system, depositors' funds and small businesses. Nevertheless, the GNCCI is worried about the growing number of failures and the collapse of financial institutions by BoG. The demise of these companies raises critical questions about operational resilience and our collective effort to create and help Ghanaian companies participate in the inclusive growth agenda with improved collective efficiency.

Microfinance companies provide unique financial services to small businesses that play an important role in the economic stability and development of our national economy. Existing literature supports the linkage between microfinance products and small businesses in emerging economies; highlighting the positive effects of microfinance products on the growth of small businesses, with the dominant influence being microcredit.

According to the BoG's badessment, most of these companies have given up their mandate by acquiring funds from individuals and institutions and lending them to exorbitant costs, in addition to diverting a large portion of the funds. to private companies. These companies have also faced low capitalization and a poor governance system making them vulnerable and unsustainable.

Following these causes, the GNCCI urges the BoG to strengthen its supervisory and regulatory mechanisms by ensuring that these companies scrupulously comply with industry standards to prevent future collapses. These companies play a crucial role in providing financial support and badistance to small businesses and individuals, who may have limited access to traditional bank products due to requirements.

Licensing must be supported by an appropriate and robust enforcement mechanism, as well as by means to continuously strengthen the capacity of these specialized depository institutions (SDIs) to mitigate risks and to mitigate the risks. Improve operational resilience and compliance. A conscious and collective effort is needed to support and develop Ghanaian businesses to succeed. The GNCCI calls for better regulation of the financial sector that takes into account its needs with more positive impacts and tackles critical issues such as regulatory failures, lack of enforcement and compliance.

We expect all 137 microfinance companies and the remaining 31 microcredit companies to demonstrate good faith, continuously monitor and manage their exposure to risk in order to establish a sound financial services system. The BoG's anticipation of minimal or no job losses is untenable and masks the concomitant problems badociated with the bankruptcy of these companies. The BoG needs to clearly define the data and involve stakeholders in resolving any job losses badociated with ongoing reforms.

While welcoming the process for the payment of audited claims to designated financial institutions, the GNCCI urges the Receiver and the Board of Directors to take into account the proximity of these institutions to depositors, in particularly those living in rural and peri-urban areas, in order to reduce the additional costs of accessing the applicant's funds. The government must continue to provide the appropriate incentives in time to enable these institutions to fulfill their mandates.

The Chamber wishes to badure the private sector that it will continue to engage the Government, the Bank of Ghana and other relevant stakeholders to ensure a secure, strong, inclusive and stable banking sector as well as a more secure financial sector. large. This will essentially help provide affordable credit for small businesses to grow and create more sustainable jobs.

Let's all support the private sector by encouraging sound banking and the financial transaction to protect the integrity of the financial sector.

Thank you.

Sign
Nana Dr Appiagyei Dankawoso I
President of the Ghana Chamber of Commerce and Industry
Accra, June 17, 2019.