Depositors who have lost their savings and investments made with several microfinance institutions (MFIs), following their collapse, are now gearing up to demand that government pays them their monies on behalf of the now defunct institutions.

Their demands are coming following the revelation by Finance Minister Ken Ofori-Atta last Thursday, as part of his 2019 budget proposals to Parliament, that government has so far paid depositors of the failed DKM Diamond Microfinance for 79,708 claims out of 99,858 claims made over deposits to the tune of GHc522 million.

This translates to 80% of all claims made following DKM’s collapse and another 12 % of total claims have been fully provided for pending proof of deposits made.

Depositors of several other failed MFIs are now demanding that they be treated by government in the same way that depositors with DKM have been treated.

They argue that their circumstances are the same as those of the DKM depositors that have been paid by government and so should similarly be paid in the interest of fairness and equity.

Legal experts agree to some extent, that these demands are genuine. However, they point out that only depositors with MFIs that were duly licensed by the Bank of Ghana have the right to even ask to be paid their deposits and even those would have to go through the same validation process that DKM depositors have been subjected to.

Many of the collapsed MFIs were found not to have been licensed by the central bank. DKM was duly licensed by ignored most of the BoG’s prudential risk management guidelines, leading to the most spectacular collapse in MFI history in Ghana, taking down some GHc770 million in customers’ deposits with it in early 2016

While some of the depositors now demanding refund of their deposits placed them with properly licensed MFIs, many others ignorantly placed their monies with unlicensed institutions, which had dubbed themselves “fun clubs.”

What they all had in common however was that they offered unsustainably high deposit rates of up to 20% a month to depositors who through financial ignorance or sheer greed, paid no attention to the accompanying risk levels their deposits were incurring.

Some depositors of failed MFIs are considering taking government and the BoG to court if their demands are not met. Queried one irate depositor with the now defunct God is Love ‘fun club’: “Why did government quietly pay DKM depositors without any public announcement while they were taking care of them, but have left us to our fate? What is good for the good must be good for the gander.”

Some critics of government’s actions are uncharitably ascribing its actions to partisan politics and the desire to score political points.

“One has only to listen to the Finance Minister’s accompanying remarks while announcing the payments to realize what is happening.”

Critics insist that this illustrates the incumbent government’s desire to be seen as more sympathetic than its predecessor under whose tenor the DKM fiasco occurred in the first place.

However, some financial analysts back government’s actions, arguing that it is simply trying to restore fading confidence in the MFI industry by the public.

According to the BoG out of 566 licensed MFIs on its register as at the beginning of 2018, 211 or (37%) are distressed or have collapsed completely.

Indeed, the latest list of MFIs released by the central bank comprises just 319 institutions.

The BoG also says that 705,396 deposits, worth GHc740.5 million held by MFIs and rural and community banks are in danger of being lost, this amount being equivalent to 52.4% of total deposits held by MFIs.

Consequently, both government and the BoG are trying to clean up the MFI industry through recapitalization and an array of corporate governance and risk management directives. MFIs rural banks hold about 8.81 % of total deposits in Ghana.

However, it is uncertain whether government has the will – and more importantly the money – to pay off depositors of the many other licensed MFIs that have gone under over the past few years.


  1. Its like you read my mind! You seem to know a
    lot about this, like you wrote the book in it or something.
    I think that you could do with some pics to drive
    the message home a little bit, but other than that, this is magnificent
    blog. A great read. I’ll certainly be back.


Please enter your comment!
Please enter your name here