Investigations conducted by CITY & BUSINESS GUIDE have revealed that some microfinance institutions operating in the Sekondi-Takoradi are collapsing as a result of their inability to sustain their operations.

The investigations also revealed that customers with huge deposits with the institutions could not get their monies as the owners could not be traced. The paper learnt that some institutions have failed to raise the requisite funds to pay the customers.

The paper gathered that ROGAI and Royal Winners Micro Finance companies operating in the Sekondi-Takoradi metropolis folded up recently and were believed to have bolted with clients’ savings running into thousands of Ghana cedis.

The paper also gathered that owing to the worrying trend, most customers of other microfinance companies had resorted to panic withdrawal, where clients decide to withdraw all their savings at a goal.

Speaking to CITY & BUSINESS GUIDE in separate interviews, some of the frustrated customers alleged that most of the microfinance companies were established with the sole purpose of duping unsuspecting clients.

They underscored the need for the microfinance institutions to sustain themselves in the business. They told CITY & BUSINESS GUIDE that most of the microfinance institutions used chunk of their capital on office set up, and were compelled to lend with client’s deposits, which landed them in trouble.

The customers warned that the various microfinance companies should not concentrate only on making ‘quick profits’ at the expense of their clients and rather focus on spreading their volumes to achieve a win-win situation.

They therefore called for the establishment of a body to oversee the operations of microfinance companies in the country. Reacting to the allegations, Elizabeth Araba Tawiah, Chief Executive Officer (CEO) of GHAMFO Investment and Savings and Loans in Takoradi, noted that microfinance institutions offer both lending and deposit products to their clients.

She pointed out that microfinance institutions were at the forefront in redefining the private sector in Ghana. She mentioned the challenges of some microfinance organizations as difficulties in recovering loans and inadequate retail capacity, as well as high transaction costs.

The more institutions fold up, the more the customers rush to the financial institutions to withdraw their savings, Ms Tawiah added. “The rampant collapse of microfinance companies can partly been attributed to high interest rate charges, this do not augur well for the industry.”

She implored the government to consider microfinance institutions in the remittances regulations policy to enable Ghanaians in the hinterlands obtain access to financing.