Microfinance business plan in ghana

microfinance business plan in ghana

They constitute the key stakeholders of the Microfinance Sub-sector in Ghana. There is a need to balance permitting continued evolution of a variety of institutions providing microfinance products and services with the need to protect depositors' funds, provide adequate information and protection to consumersand coordinate expansion and regulation of different segments of the market.

Ghana microfinance institutions network (ghamfin)

However, it is important to bear in mind that these organisations deliver loans to social groups which would otherwise have no access to short-term capital and as a result the organisations incur much higher costs for making the loans. Therefore there is room for expanding the microfinance sector in Ghana. This lack of information has affected targeting of clients and ultimate poverty reduction. Over the next couple of hours we visited a number of businesses, including the local bar, financed through the Opportunity International microfinance service. Augustina Kwafu had successfully expanded her hair styling business by taking a series of loans from the Opportunity International service. They constitute the key stakeholders of the Microfinance Sub-sector in Ghana. Funding for the sub-sector has been from three sources: the institutions themselves, government, and development partners. Better coordination and collaboration among key stakeholders including the development partners, government and other agencies, could help to better integrate microfinance with the development of the overall financial sector.

Towards the end of the prayer meeting we were invited through to watch and listen and also to be introduced to the branch team. We are also providing capacity building training to Susu Collectors to make sure that they do their credit risk correctly and any training needs they may need".

Finally, while Ghana has a reasonably diversified and supervised regulatory framework for formal financial institutions licensed by BoG, there is concern that appropriate regulation needs to be extended to other institutions operating in the microfinance sub-sector for example the legal framework for credit unions in order to improve the outreach, sustainability and efficiency of savings, facilitate credit delivery, and institutional arrangements.

For the rest of the day we visited a rural school supported, also through loans, by Opportunity International. According to traditional commercial banking principles, the credit methodology requires documentary evidence, long-standing bank-customer relationship and collateral, which most micro and small businesses do not possess.

The outcome is inadequate data base for decision-making and planning. However, it is important to bear in mind that these organisations deliver loans to social groups which would otherwise have no access to short-term capital and as a result the organisations incur much higher costs for making the loans.

The objective of microfinance is to provide resources for the poor. In addition to the interest rate charge there were also fees for account set-up and other services, the annual percentage rate APR — the UKs standard for calculating interest rate charges would therefore be quite close to payday or door step lending in the UK.

Among the constraints are inappropriate institutional arrangements, poor regulatory environment, inadequate capacities, lack of coordination and collaboration, poor institutional linkages, no specific set of criteria developed to categorize beneficiaries, channeling of funds by MDAs, lack of linkages between formal and informal financial institutions, inadequate skills and professionalism, and inadequate capital.

business plan for microfinance company pdf

As customers started to flow into the branch and the tellers started to greet their first customers of the day, we headed further out of Accra to visit beneficiaries of the loans service.

In this case the loans had been used to build classrooms and purchase equipment for the school.

Microfinance business plan ppt

As a result there is lack of coherent approach, fragmentation, duplication and inadequate collaboration between and among MDAs, MMDAs, development partners, service providers, practitioners and end users. Thus, specific services and products that target women for entrepreneurship development to enable them engage in economic activities and become more self-reliant need to be more coherent. The lack of common benchmarks, methods for measuring and information sharing further inhibits the performance of the sub-sector. The objective of microfinance is to provide resources for the poor. Among the constraints are inappropriate institutional arrangements, poor regulatory environment, inadequate capacities, lack of coordination and collaboration, poor institutional linkages, no specific set of criteria developed to categorize beneficiaries, channeling of funds by MDAs, lack of linkages between formal and informal financial institutions, inadequate skills and professionalism, and inadequate capital. A microfinance institution often makes loans to people who are supported by a group of other borrowers or potential borrowers, the group then helps to guarantee the loan. Towards the end of the prayer meeting we were invited through to watch and listen and also to be introduced to the branch team. Such is the power of peer pressure. Microfinance institutions in this category face rigid regulatory and supervisory systems that present some challenges for product innovativeness, outreach and ultimately the performance of the institutions. Microfinance may be complemented by non-financial services, especially training, to improve the ability of clients to utilize the facilities effectively. In addition to the interest rate charge there were also fees for account set-up and other services, the annual percentage rate APR — the UKs standard for calculating interest rate charges would therefore be quite close to payday or door step lending in the UK. I was particularly struck by the fact that these presentations felt rather like a group of western donors visiting the beneficiaries of an aid programme, when in actuality we were seeing a successful, and presumably profitable, business and its customers. Lack of adequate and reliable information on outreach in terms of its depth and breadth remains one of the most daunting in the sub-sector.
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Microfinance in Ghana