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04.04.2017 Politics

MPs push for probe into Micro-finance scam in BA

By MyJoyOnline
MPs push for probe into Micro-finance scam in BA
LISTEN APR 4, 2017

Members of Parliament (MPs) are asking for a parliamentary probe into the micro-finance scam that rocked the Brong Ahafo Region last year leading to the loss of millions of depositors' money.

The MPs want the Speaker, Professor Aaron Mike Ocquaye, to treat the issue with the seriousness it deserves.

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They are convinced a successful investigation will bring some relief to the victims who lost their life savings running into millions of cedis.

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The atmosphere in the Brong Ahafo Region was mournful after hundreds of residents lost their investments over the collapse of some microfinance companies there.

DKM Microfinance, Little Drops Financial Services, God is Love Fun Club, Jaster Motors and Investment Limited and Care for Humanity Fun Club took deposits from clients with the promise of huge returns, but they ended bolting with their investments. They shut down their offices making it difficult for clients to contact them about their deposits.

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Many of the people who invested were public servants who were reported to have gone for loans from the tradition banks for the investment.

The scam also took place in the Volta, Upper East and Upper West Regions. Some residents of Ho marched through the principal streets to petition city authorities over the situation.

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The issue was blamed on the failure of the Central Bank to regulate the activities of non-banking institutions in the country. Then President John Mahama told Parliament the "negligence" on the part of Bank of Ghana led to the scam.

“These microfinance companies come under the direct supervision of the Bank of Ghana. Unfortunately, lack of effective supervision on the part of the central bank has resulted in many cases in which microfinance licensed by the Bank have breached the rules of procedure they were supposed to follow and have created supposed pyramid schemes that eventually came crashing down,” he said.

He had said his government was drafting a document, the Ghana Deposits Protection Bill, which would be presented to Parliament for passage into law.

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Former President John Mahama
Mr Mahama said the bill when passed would "permanently sanitise and restore credibility to the Microfinance industry and strengthen the Bank of Ghana's supervision."

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The companies were liquidated and their properties sold from which some depositors were paid.

But the MPs said they believe the scam was deliberately caused by the Microfinance companies with the "tacit" collaboration of some state institutions.

They are demanding full investigation into the matter with recommendations to forestall future occurrences.

Story by Ghana | | Austin Brako-Powers | [email protected]

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