BY Afia Nyarko Asare
The roles of the member Associations of Microfinance institutions has been identified as vital means of augmenting self-regulation to complement the financial sector regulation.
However, a careful diagnosis is required to identify the most crucial aspect of self-regulations needed to at each and every stage of the industry’s development.
Mr. Kwaku Duah Berchie, who doubles as the Board Chairman for the Ghana Savings and Loans Association and the Ghana Microfinance Institutions Networks recommended that this will guide the operations to re-enforce business continuity.
He referred to a recent publication by Microfinance Barometer report which indicated that, “despite positive transformations in recent years, microfinance is sometimes misunderstood or poorly perceived by the public opinion and by the economists. There is the need countries such as Ghana to consider microfinance as an entire segment of development policies and as a pioneering sector responsible” in order to make the out of it.
The BOD Chairman disclosed that the digital revolution is profoundly transforming the world of finance and forcing financial service providers to adopt. “Industry experts had indicated that digitalization of microfinance essential to the survival of the sector. Over the past decade, financial service providers have taken advantage of disruptive technologies and regulatory changes to create an array of new banking business models and solutions that could potentially make it easier to deliver financial services to the unbanked” he explained.
In spite of these developments, most traditional banks have continued to ignore the needs of the excluded and underserved customers. These gaps have been taught through by fintec companies to find appropriate solutions.
Mr. Duah-Berchie, continued that although the MFI’s industry is highly profitable, it is conversely, highly inefficient in terms of operating costs and outreach to the mass market. Technology would certainly be the game changer.
He revealed that technology is part of the solution but real change requires solid business models, skills and delivery capacity to make a real difference. Also, very solid understanding of the development context in which one is operating is part of the solution.
“Digital services pertain to reaching the poor, but it has a challenging question of how the digital world connects with the non-digital as most people still operates with cash. To get the poor into the digital ecosysytem, people need to be able to convert cash into digital and back again, and for this infrastructure remains critically important”.
Yet, there is still an important role for non-banks and microfinance institutions in the new financial services landscape, poor people need more than payments and short term digital credit.
Mr. Kwaku Duah-Berchie was speaking at the 11th Annual General Meeting of the Ghana Microfinance Institutions Network at the Sunlodge Hotel at Tesano in Accra.
BY Afia Nyarko Asare