Microfinance operators are urging the Bank of Ghana (BoG) to review key aspects of its revised capital framework, warning that the proposed minimum capital requirements and compressed implementation timeline could threaten financial inclusion and trigger unintended disruptions across the sector.
While industry stakeholders have broadly welcomed the central bank’s efforts to strengthen governance, improve resilience and modernise the sector, they argue that the current framework does not adequately reflect the realities of Ghana’s microfinance landscape.
The concerns were raised at a high-level roundtable in Accra organised by the Ghana Association of Microfinance Companies (GAMC), where operators, consultants and academics examined the implications of the new regulatory regime.
Under guidelines issued by the Bank of Ghana on January 27, 2026, existing microfinance institutions seeking to transition into Microfinance Banks must meet a minimum capital requirement of GH¢50 million by December 31, 2026. New entrants are required to raise GH¢100 million.
The framework also replaces the previous Tier 1 to Tier 4 structure with four new categories: Microfinance Banks, Community Banks, Credit Unions and Last Mile Providers.
However, with institutions required to declare their preferred operational pathway by June 30, 2026, industry players say the timeline is proving challenging.
GAMC Board Chair Rebecca Addo stressed that the sector is not opposed to reform but is seeking a framework that balances regulatory ambition with practical implementation realities.
“Our engagement today should not be misconstrued as opposition to regulatory reform. It is a reflection of a shared conviction that meaningful reform must be ambitious in intent, but also grounded in practical realities of implementation and sector capacity,” she said.
She noted that the industry supports the central bank’s objectives of enhancing governance standards, strengthening depositor protection and improving institutional resilience.
The primary concern, stakeholders said, is the GH¢50 million capital requirement for existing institutions.
Chief Executive Officer of Equity Focus Microfinance, Ebenezer Odame, argued that increasing capital alone would not address the structural weaknesses that have historically affected parts of the industry.
“Capital alone does not fix governance failures. The quality of supervision and internal discipline matters just as much,” he stated.
Participants maintained that stronger governance systems, risk management frameworks and effective supervision should be given equal attention alongside recapitalisation efforts.
Managing Consultant at Protégé Consult, David Narh Aguda, warned that applying a uniform capital threshold across more than 130 institutions could create market distortions and alter the sector’s traditional focus.
According to him, microfinance institutions operate on relatively small loan sizes and serve customers often overlooked by mainstream financial institutions. Requiring all operators to hold significantly higher capital could force them to change their business models to generate adequate returns.
“Increasing capital is not in itself the problem. The issue is whether the sector can productively deploy that level of capital without fundamentally changing its risk profile and client focus,” he explained.
Mr. Aguda cautioned that institutions may be compelled to shift attention toward higher-income customers, undermining their core mandate of serving low-income households, micro-enterprises and informal sector businesses.
He further questioned whether governance and board structures are being strengthened alongside the capital requirements.
“Your corporate governance structure will change completely. Your risk appetite will change completely. Nobody is talking about that,” he said.
Stakeholders also drew lessons from previous recapitalisation exercises within the sector.
Chief Executive Officer of MGI Microfinance, Dr. Steven Bediako, recalled that earlier capital increases contributed to a significant reduction in the number of licensed operators.
According to him, the sector shrank from approximately 347 institutions to around 120 following previous reforms, raising concerns about whether the latest measures could trigger another wave of exits.
“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,” he said.
Academic experts at the roundtable called for a more data-driven approach to determining capital thresholds.
Professor James Attah Peprah of the University of Cape Coast argued that the regulator possesses sufficient industry data to develop risk-based capital requirements tailored to different categories of institutions.
Rather than applying a single threshold across the sector, he suggested that capital requirements should reflect institutional size, complexity and risk exposure.
Support also emerged for a tiered capital structure that would distinguish between community-based institutions, regional operators and national microfinance banks.
Under such a framework, capital requirements would increase progressively according to operational scope and risk profile.
Participants further called for a phased implementation period spanning three to five years, arguing that mergers, acquisitions and recapitalisation efforts require more time to execute successfully.
They warned that rushed consolidation could destabilise institutions and weaken depositor confidence.
A major concern throughout the discussions was the potential impact on financial inclusion.
With an estimated 4.5 million customers relying on microfinance institutions, stakeholders cautioned that widespread closures or forced mergers could reduce access to financial services for market traders, smallholder farmers, artisans and informal sector workers.
Prof. Peprah warned that instability within a section of the industry could trigger broader confidence shocks across the financial system.
“Once confidence is eroded, the effects are rarely contained to weak institutions alone. Even sound institutions can face withdrawal pressure in a contagion scenario,” he said.
Despite the concerns, GAMC reaffirmed its commitment to engaging constructively with the Bank of Ghana to ensure the final framework achieves its objectives without compromising financial inclusion or sector sustainability.
Rebecca Addo called for continued dialogue between regulators and industry participants ahead of the June 30 deadline.
“We remain committed to working constructively with the Bank of Ghana to ensure that the final framework reflects both regulatory ambition and sector realities,” she said.
Stakeholders noted that the absence of Bank of Ghana representatives at the roundtable represented a missed opportunity for direct engagement on the proposed reforms.
As discussions continue, the industry is pushing for a framework that strengthens the sector while preserving its critical role in expanding access to finance for millions of Ghanaians.
