*warns of inclusion rollback
Ghana’s microfinance industry has urged the Bank of Ghana (BoG) to reconsider the capital requirements and timelines at the centre of its landmark sector reform.
Stakeholders warned that the current design, while broadly welcomed in its intent, risks triggering the very instability it seeks to prevent, and could strip millions of low-income Ghanaians of access to formal financial services.
The concerns were raised at a roundtable convened by the Ghana Association of Microfinance Companies (GAMC) in Accra this week, bringing together sector operators, financial consultants and academics to examine the implications of the central bank’s revised microfinance framework ahead of a critical June 30 compliance deadline.
Ghana’s microfinance sector has had a turbulent decade. A financial sector cleanup between 2017 and 2020, one of the most sweeping regulatory interventions in sub-Saharan Africa in recent memory, saw the number of licensed microfinance institutions contract from roughly 347 to approximately 120, following widespread findings of undercapitalisation, governance failures and depositor fund misappropriation.
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The exercise imposed significant fiscal costs on the state and left lasting damage to public confidence in non-bank financial institutions.
The West African nation’s central bank revised framework, issued in January 2026, is designed to prevent a recurrence. It replaces a four-tier licensing classification with four clearly defined institutional categories; Microfinance Banks, Community Banks, Credit Unions and Last Mile Providers, and sets a minimum capital threshold of GH¢50 million (US$4.2 million) for existing institutions seeking to operate as Microfinance Banks, with new entrants required to inject GH¢100 million (US$8.4 million). Full compliance is required by December 31, 2026, with institutions required to declare their transition pathway by June 30.
The objectives are broadly acknowledged as sound. GAMC Board Chair, Rebecca Addo, opening Wednesday’s roundtable, said the industry supports the regulator’s desire to strengthen governance, improve operational resilience and deepen depositor protection.
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“Our gathering here today should not be interpreted as resistance to the reform. The conversation is how reform can best achieve its intended objectives without unintentionally weakening the very institutions that have been central to advancing financial inclusion across Ghana,” she said.
The GH¢50 million (US$4.2 million) minimum drew sustained scrutiny from panelists, who challenged both its quantum and its underlying logic.
David Narh Aguda, Managing Consultant at Protégé Consult, raised a systemic risk argument that cut to the heart of the debate. With some 132 licensed microfinance companies currently operating, a uniform GH¢50 million (US$4.2 million) threshold applied across the sector would inject a volume of capital that Ghana’s microfinance market, characterised by average loan tickets of GH¢1,500 (US$126) to GH¢3,000 (US$252) — cannot productively absorb.
Institutions forced to deploy large capital pools through small-ticket lending, he argued, would face investor pressure to migrate upmarket, competing directly with commercial banks and abandoning the low-income clients at the core of their mandate.
“Your corporate governance structure will change completely. Your risk appetite will change completely. Nobody is talking about that. The directive on capital is there, but has there been any directive on how many board members you should have, what expertise they must bring? It is incomplete,” Mr. Aguda said.
Ebenezer Odame, Chief Executive of Equity Focus Microfinance, drew a pointed comparison with Ghana’s rural banking sub-sector, which has maintained relative governance stability under significantly lower capital thresholds.
The difference, he argued, is supervision intensity, not capitalisation. “When you have your supervision right, you have your corporate governance right,” he stated.
Dr. Steven Bediako, Chief Executive of MGI Microfinance, situated the current reform within Ghana’s recent regulatory history. Earlier recapitalisation cycles, including a capital increase from GH¢100,000 to GH¢2 million under the transition to BoG supervision, had already triggered widespread institutional distress and lasting reputational damage.
“When capital was raised from GH¢100,000 to GH¢2 million, a lot of companies fell off. Public confidence in the microfinance sector became questionable. We moved from 347 institutions to about 120. That is the history we are sitting with,” he said.
Prof. James Attah Peprah of the University of Cape Coast called for an evidence-based approach to setting the threshold. The apex bank, he noted, receives monthly and weekly reports from all licensed institutions and possesses the balance sheet data required to derive a risk-adjusted capital figure grounded in the sector’s actual financial profile.
A figure of between GH¢10 million (US$840,000) and GH¢15 million (US$1.26 million), he suggested, would be demanding but achievable, while still representing meaningful capitalisation strengthening.
A tiered model. The industry’s counter-proposal
The clearest point of consensus among panelists was support for a tiered capital regime calibrated to geography and business model, an approach already employed in Kenya and Nigeria.
Ghana’s revised framework already contains implicit tiers in its institutional categories. What practitioners are seeking is capital thresholds differentiated to match those categories, primarily, lower requirements for community-level, single-branch operators serving rural and peri-urban clients; intermediate thresholds for regional multi-branch institutions; and higher requirements for nationally operating full-service Microfinance Banks.
Practitioners also proposed a phased 3–5 year implementation window with annual benchmarks, arguing that a graduated approach would allow institutions to plan credibly, retain depositor confidence and attract investment in tranches, rather than forcing rushed consolidation within a nine-month window that may not be sufficient even for basic due diligence processes.
Wider costs
The potential human cost of mass institutional failures gave the roundtable its most urgent register. Panelists cited a combined customer base of approximately 4.5 million across the sector, predominantly low-income households, market traders, smallholder farmers and informal sector operators with limited or no access to commercial banking services.
Prof. Attah Peprah warned that the consequences of mass institutional failures could extend well beyond individual closures. A wave of exits risked triggering sector-wide deposit runs as public panic spread indiscriminately, threatening even well-capitalised institutions.
He also raised the question of whether the Ghana Deposit Protection Corporation would have the fiscal capacity to settle claims at the scale that simultaneous failures would generate.
“Even those who have the GH¢50 million, they would not survive, because everybody else is catching on like wildfire,” he said.
Dr. Bediako noted that the clients most dependent on microfinance have no viable alternative within the formal financial system, and that their exclusion would produce downstream social consequences, lost livelihoods, disrupted household income streams and, in the most acute cases, the kind of social distress that accompanied the 2017–2020 cleanup.
The path forward
GAMC called on the BoG to resume direct consultation with industry stakeholders before the June 30 deadline and indicated the roundtable would produce a formal set of recommendations for submission to the regulator. The central bank was not represented at Wednesday’s event.
The reform debate in Ghana carries lessons that resonate across the continent. Several African markets, including Nigeria, Kenya and Uganda, have navigated similar tensions between regulatory strengthening and inclusion preservation in their microfinance sectors, with tiered licensing frameworks emerging as the broadly adopted instrument for managing that balance.
The Bank of Ghana did not have representation at the roundtable.
