The Ghana Microfinance Institutions Network (GHAMFIN) is working to set up a GH¢10million bailout fund to support its member, as the outbreak of COVID-19 has adversely impacted their bottom lines.
The action, according to Executive Director of GHAMFIN Yaw Gyamfi, is to help prevent any potential bankruptcy of any of its members during the scourge of COVID-19 after the sector had gone through a painful clean-up exercise. The network, he noted, is pushing to establish the fund soon to address some of the financial challenges of its members.
“As an Association, apart from the promise from government to support various sectors that have been affected by COVID-19, we are looking at setting up a recovery fund. There are a number of areas that we are thinking of; for instance, companies are still paying salaries but nothing good is happening, and so how do we cushion all those companies?
“Again, there are clients who are not repaying their loans; and in the long run it will affect the financial institutions’ position. So, we are trying to see how we can minimise all these effects on our members,” Mr. Gyamfi said.
The move, according to him, will aid the sector support the many SMEs they finance to ensure their operations are not halted due to financial constraints, so they are able to provide renumeration for employees. “We want to help our member support SMEs to sustain their operations; if there are no operations there will be no salary, and that is the way we are looking at this,” he added.
He disclosed that GHAMFIN has conducted a survey to understand the extent of the challenge so it makes a good case to attract funding: “We have done a survey to find out the real issues on the ground, so that we can make a very solid case to pull funds from our partners, government and everyone into this fund.
“Gone are the days when you just tell stories; we want to substantiate whatever we are putting across so that the people who are ready to help will feel the impact of what the sector is going through and the need to help it stay operational and support SMEs,” Mr. Gyamfi intimated.
The network has already contacted its international partners to help in developing the fund. “We have started communication with some of our foreign partners. Some have already had engagements with the Ministry of Finance, so we are going to have a meeting with the ministry to strike out all these names and get a good and clear picture of who we can approach for support.”
He is confident about the move, saying it will be structured in a way that will see the funds revolve and grow. “I can tell you on authority that we are very hopeful; something good will drop for us to be able to work with the people.
“We looking at a revolving fund, whereby you take the money at a very low interest rate and when you are done paying you can come for another round – and then we move on with it like that. We will also be very strict; we are not just going to get money and distribute. We will be strict with all the indicators that we should look at. If we see from your books that you will not be able to survive the next month, there will be no need to put in money,” Mr. Gyamfi concluded.