Editorial: Large credit unions must come under BoG supervision

A rural banking expert has lauded the Bank of Ghana’s (BoG) decision to bring large credit unions under its supervision.

Under microfinance sector reforms, credit unions with assets of GH¢60million and above will – for the first time – be licenced and subject to prudential supervision by the central bank.

Executive Director of Proven Trusted Solutions Joseph Akossey believes the move is a critical step in strengthening governance and expanding financial inclusion across the country.

The reform comes more than a decade after the Cooperative Credit Union Regulation (LI 225) was passed in 2015, when industry players had expected prompt action from BoG and the Ministry of Finance.

Mr. Akossey expressed confidence that the development will professionalise a sector that has grown steadily but remains fragmented and under-penetrated, despite the fact Ghana pioneered the credit union movement in Africa during 1955.

He noted that the first credit union was formed at Jirapa in Upper East Region. However, the credit union movement lags compared to its counterparts elsewhere – especially in Kenya.

“Credit union penetration in Ghana is less than five percent, which is too small compared to Kenya where one-third of adults belong to a credit union,” Akossey stated.

The Ghana Cooperative Credit Unions Association (CUA) Limited, the premier umbrella-body for credit unions in the country, has over 400 unions with about 2.5 million members.

Today, the sector remains fragmented – dominated by small players with limited impact. Mr. Akossey believes with robust supervision the sector can grow and integrate many people into the national financial ecosystem.

Mr. Akossey urged BoG to ensure that the upcoming corporate governance directives for credit unions consider the cooperative principle which guides these member-owned institutions.

He called on the central bank to establish a dedicated unit to supervise credit unions. “Personnel in this unit must understand the credit union concept and principles.”

Member-owned institutions are different from other financial institutions and must be managed with cooperative values in mind.