The Ghana Microfinance Institutions Network (GHAMFIN) with its development partner, German Spark Assenstiftung Ghana (SBFIC) have instituted a revolving Credit Fund (RCF) that will see to it GH¢1.4million is disbursed to Microfinance Institutions (MFIs) which have been affected by impacts of the COVID-19 pandemic to enable them continue operating and serving their clients.
The RCF is however funded by the Federal Ministry for Economic Cooperation and Development of Germany (BMZ).
Speaking at the launch of the Revolving Credit Fund (RCF), Executive of Director of GHAMFIN, Yaw Gyamfi, said resources from the fund are intended to mitigate possible temporary liquidity challenges caused by COVID-19; and to ensure the continuation of lending to clients of MFIs – loans for income-generating activities.
“We want everybody to survive with their businesses, and I would encourage all those who qualify to apply; and once you get it, you also make the effort to repay so we can give this money back so that others too can get, since we serve people at the lower level of the financial pyramid,” he stressed
A Board Director of GHAMFIN, Bernard Appea, also added that the fund is to provide temporary support and raise additional sources of funding for active members of the organisation in order to bounce back from their operations’ challenges.
He said loans of up to GH¢50,000 per institution are available for qualified microfinance institutions within a loan term of 12 months. However, principal and interest will be executed on equal monthly installments over the duration of the loan.
A representative from Bank of Ghana (BoG), Yaw Sarpong, noted that: “The COVID-19 pandemic has highlighted the urgent need for transformation; especially in the areas of service delivery and customer relations for small and informal intermediaries, it is critical to carry along small businesses for economic recovery”.
He said this while citing the World Bank’s report that estimated COVID-19 pushed about 70 million people into poverty, adding that there is a need for businesses to explore all available opportunities to mitigate negative impacts from the pandemic.
Mr. Sarpong said the BoG is committed to deepening its engagement and support to GHAMFIN as it continues to support MFIs through this Revolving Credit Fund (RCF), which he described as a “laudable and timely initiative”.
For her part, Dr. Bianca Janecka – Project leader and a representative of the German Spark Assenstiftung Ghana (SBFIC), said the loan will help the institutions to better comply with the ecosystem and sustain their businesses. “If this become a success, it will generate interest among other investors – which will in the long run support the Microfinance Institutions,” she added.
MFIs that qualify for the fund
MFIs that qualify for the fund include those in Tiers 2, 3, and 4 that are duly licenced by the Bank of Ghana and registered with the respective body/apex association. Also, MFIs which comply with the regulatory reporting framework (you are able to provide a copy of the last Prudential Report submitted).
MFIs that have already taken measures to effectively manage the business challenges caused by the COVID-19 pandemic and are active members in good standing with their apex body.