Players in Ghana’s microfinance sector have appealed to the Bank of Ghana (BoG) to reconsider its proposed increase in the minimum capital requirement for microfinance companies.

They cautioned that the policy, if implemented in its current form, could threaten the survival of many indigenous firms and undermine financial inclusion.

According to industry stakeholders, the proposed jump in minimum capital from GH¢2 million to GH¢50 million within a short timeframe is excessively high and may be beyond the reach of many operators.

They argued that the move could force a significant number of companies out of business, with far-reaching consequences for employment, small businesses and millions of customers who depend on microfinance services.

The concerns were raised at a roundtable discussion on microfinance sector reforms held in Accra yesterday on the theme: ‘Reshaping the Microfinance Sector Reform in Ghana: Balancing Stability, Inclusion and Growth.’

The BoG has directed all microfinance companies to recapitalise to GH¢50 million by the end of the year as part of broader reforms aimed at strengthening governance, improving operational resilience and restoring confidence in the sector.

Speaking at the event, a Professor at the School of Economics of the University of Cape Coast, Professor James Peprah, urged the central bank to adopt a tiered recapitalisation approach that “takes into account the size and operational scope of individual institutions.”

He stressed that while the industry supported reforms, the implementation process should be gradual and based on extensive stakeholder consultations.

Prof. Peprah also advocated limited foreign participation in the sector to preserve opportunities for indigenous Ghanaian-owned institutions.

A Principal Consultant at Protege Consult, Mr David Narh Aguda, described the timeline for recapitalisation as unrealistic, saying it would be difficult for many firms to raise the required capital within a year.

He proposed a phased implementation strategy that would allow operators sufficient time to mobilise funds and meet other regulatory requirements, including investments in technology and operational systems.

Mr Aguda noted that microfinance institutions played a critical role in serving customers at the lower end of the banking market and therefore needed support to remain viable and competitive.

The Chief Executive Officer of Equity Microfinance Limited, Mr Ebenezer Odame, stressed that the collapse of microfinance companies could lead to significant job losses and negatively affect millions of customers nationwide.

He appealed to the BoG to grant operators more time to meet the new capital threshold, arguing that any widespread collapse within the sector could have ripple effects across the broader financial industry.

The Chief Executive Officer of MGI Microfinance Company, Dr Steve Bediako, said microfinance institutions remained vital to financial inclusion, particularly in underserved communities.

He described the proposed capital requirement as too high and called for a differentiated framework based on the geographical coverage and operational capacity of individual institutions.

The Board Chairperson of the Ghana Association of Microfinance Companies (GAMC), Mrs Rebecca Addo, emphasised that the industry’s concerns should not be misconstrued as opposition to reform.

She said the association fully supported efforts to strengthen governance, improve transparency and enhance depositor protection but believed the reform process must be practical, inclusive and responsive to industry realities.

Mrs Addo noted that microfinance institutions had for decades served as a bridge between the formal financial sector and millions of Ghanaians, including market women, farmers, artisans, traders and small business owners.

She cautioned that while regulatory reforms were necessary, policymakers must ensure that efforts to strengthen the sector did not inadvertently reduce access to financial services for low-income households and small enterprises.

“Our objective is not confrontation. Our objective is dialogue. Our objective is not criticism. Our objective is collaboration,” she stated, calling for continued engagement between the regulator and industry stakeholders to achieve reforms that promote stability, inclusion and sustainable growth.

She expressed confidence that through dialogue and partnership, stakeholders could arrive at solutions that safeguard the interests of both the financial sector and the millions of Ghanaians who rely on microfinance services.