ARE GHANAIAN FNGOs REACHING THE FINANCIALLY MARGINALIZED?

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AFIA NYARKO ASARE

The United Nations 2016 Ghana Poverty and Inequality Report reveals that despite the economic growth, inequality has been increasing and poverty remains prevalent.
According to the Report, Ghana has steadily experienced increasing growth of over 7% per year on average since 2005 following the attainment of middle-income country status in 2010 and discovery of offshore oil reserves, per capita growth in the country has remained relatively high.
The prevalence of poverty and inequality in economic growth between the urban and rural poor which makes the intermediary roles of Financial Non-Governmental Organizations (FNGOs) critical in reaching the unbanked and attainment of the global agenda of alleviating poverty.
Financial Non-Governmental Organizations was initiated to provide micro financial services to promote financial inclusion and improve microenterprises for financial sustainability among the poor but economically active people in Ghana.
FNGOs are not-for-profit organizations that execute wide range of services and work persistently to ensure the social welfare and wellbeing in order to cause change and enhance the economy of the country.
These Non-governmental agencies are to play significant role of microfinance intermediaries in terms of outreach to micro-entrepreneurs in communities which have been financially marginalized by the traditional financial institutions to enlighten them on the essence of formal financial transactions.
FNGOs provide micro financial services and products that are affordable, accessible and pleasant to the needs of their clients for them to adapt and grow their various businesses.
Given their social mission, local focus and roots, FNGOs make it a point to have access to the informal knowledge of the local clients, in order to understand them and this plays an important role in service delivery in the community.
The Association of Financial Non-Governmental Organization (ASSFIN) is a self-regulated voluntary organization and the apex body for FNGOs in Ghana. It was incorporated as a company limited by guarantee with the Registrar General’s Department under the Act 179 of Ghana’s Companies Code of 1963 and was inducted at Tamale in October 2005.
ASSFIN has been charged by Bank of Ghana (BoG) to supervise and monitor its members to ensure that rules and requirements expected of FNGOs are adhered and upheld by members.
The association also organize and coordinate sensitization programs to train and educate the human resources of its members to build their skills and capacity in dealing with their clients as well as technical capacity. Also, they help establish and uphold standards in performance and responsible finance for client protection.
ASSFIN serves as a representative that lobbies and advocates on behalf of its members when certain regulatory policies will be unfavorable to its members. And also enables them to form relationship with other apex bodies, regulatory bodies and stakeholders.
Although FNGOs were established to promote financial inclusion and provide affordable financial services to the low income population in the country, according to recent data available, their outreach and sustainability performance is weak and their return on assets and equity are very low. With 42 FNGOs operating in Ghana, only 11 have obtained the required license from the BoG.
Therefore current situation in the Ghanaian financial sector should be a wakeup call to FNGOs and their regulators to step up their game by carrying out more sensitization programs to ensure that the rural poor but financially marginalized and the underserved are reached.


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