Comparative Review Of Microfinance Regulatory Framework Issues In Benin, Ghana, And Tanzania

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished.

An Impact Study of the Village Savings and Loan Association (VSLA) Program in Zanzibar, Tanzania

“…These organizations are also limited in the breadth of services they provide. They are not allowed, by law, to accept savings deposits except those used as collateral, which denies the poor the opportunity to save (Gallardo et al 2005). Because they are more heavily regulated and employ a professional staff, NGO-MFIs also involve high transaction costs.…”

Investment Impact of Microfinance Credit in Ghana

“…Asiama (2007) writes that the first credit union in Africa was established in Northern Ghana in 1955 by Canadian Catholic missionaries. Over the years, the microfinance sector has thrived and developed into a well-organized and nationally coordinated commercial sector in the country regardless the numerous challenges it has faced and this has been made possible by the various financial sector policies and programs undertaken by different governments since independence (Gallardo et al, 2005). Among these are the provision of subsidized credits in the 1950s, the establishment of the Agricultural Development Bank in 1965 specifically to address the financial needs of the fisheries and agricultural sector, the establishment of Rural and Community Banks (RCBs) and the introduction of regulations such as commercial banks being required to set aside 20% of total portfolio to promote lending to agriculture and small scale industries in the early 1980s, among some few others (Steel et al, 2003).…”

“…His paper primarily sought to provide a framework for addressing regulatory issues which impact the operations and the institutional development of MFIs. Gallardo et al (2005) also worked on the comparative review of microfinance regulatory framework issues in Benin, Ghana and Tanzania also with the objective of suggesting how the sector must be regulated. Basu et al (2004) estimated that in Ghana only about 6 percent of the entire population has access to formal financial services, with the majority applicants denied credit and these individuals and enterprises therefore tend to rely largely on informal sources such as friends, relatives, suppliers and money lenders for their financial www.ccsenet.org/ijef International Journal of Economics and Finance Vol.…”

“…GHAMFIN was established in the year 1998 with the aid of the World Bank to regulate and the keep the database of MFI's in Ghana. In addition to this, Gallardo et al (2005) lists the activities of GHAMFIN as the microfinance institutional body undertaking policy advocacy and representation, accessing resources for and implementing institutional and staff capacity building programs, and offering a platform for the dissemination and exchange of best practices in microfinance. Note 7.…”