The Support Programme for Enterprise Empowerment and Development (SPEED) Ghana has started the process of introducing rating schemes for microfinance institutions.
The rating service will examine smaller microfinance institutions in specific areas including governance and decision making, risk management, products and services as well as efficiency and profitability.
The ultimate aim of the service, which is said to have propped up the microfinance service delivery in Uganda, is expected to enhance the performance and transparency of Ghana's microfinance sub-sector.
“This service will enable the smaller institutions engaged in microfinance to harp on their strengths and work on their weaknesses,” said a communique issued at the end of a one-day workshop on the introduction of the service in the country.
The workshop brought together players and stakeholders in the microfinance sub-sector.
They included representatives from the rural and community banks, the Ghana Microfinance Institutions Network (GHAMFIN), Credit Unions Association (CUA), Association of Financial NGOs, Sinapi Aba Trust, the Bank of Ghana, the Ministry of Finance and academia.
Under the system, the institutions will voluntarily avail themselves to be rated on those specific areas. It is supposed to elicit confidence from users of their services and the public at large.
“The rating service will assist clients and consumers of these financial institutions because they will be assured that the institutions they trust their money to will be transparent and committed to professionalism,” the comminique said.
It said the rating service would help the local microfinance institutions to source for more funding as international lenders and commercial banks would now have the confidence to know whether it was safe to lend to a particular institution.
SPEED Ghana is a technical and financial support programme with three components — business development services, technical assistance support to microfinance institutions and a financing facility that offers wholesale financial products to institutions engaged in lending to micro- small- and medium enterprises or are yet to enter that market.
The programme is a collaboration between the government of Ghana, the German Technical Co-operation (GTZ) and the Danish International Development Agency (DANIDA).
From The Business Desk