Transparent Pricing Initiative in Ghana: Launched and On-going!

by Rhoda Mahamah

The enabling APR & EIR Program recently expanded to Ghana, now active in Malawi, Uganda, Rwanda, South Africa and Ghana. The launch in Ghana was successful, meet with enthusiasm from a wide range of industry stakeholders.

Preparation for the launch started in January with meetings with the five microfinance networks in Ghana. MFTransparency ultimately established a formal partnership with The Ghana Microfinance Institutions Network (GHAMFIN), which is the umbrella network for microfinance in Ghana. Legally established in late 1998, GHAMFIN’s mission is to coordinate and support the activities of microfinance institutions with a view to promoting the development of an efficient and sustainable microfinance industry in Ghana.  We met also with the Association of Financial Non-Governmental Organizations (ASSFIN).  ASSFIN is registered as a non-governmental organization in Ghana with 50 members and three departmental units in Governance, Training and Monitoring and Evaluation, with potential synergies with MFTransparency in the latter two units. Next was the Association of Rural Banks.  Rural Banks are licensed and regulated by the Central Bank of Ghana through the ARB Apex Bank which is a mini Central Bank in Ghana for the Rural/ Community Banks (RCBs). The RCBs are financed mainly through the Rural Financial Services Project (RFSP), which is a Government of Ghana project with the aim of broadening and deepening financial intermediation in the rural areas. We then met with  the Ghana Cooperative Credit Union Association (CUA) and the Ghana Cooperative of Susu Collectors’ Association (GCSCA). Currently there are about 527 unions with a total membership of over 550,000 operating under the apex body of CUA. The GCSCA has a goal to register all Susu operators in Ghana for regulation and monitoring, and to build their capacities for efficient microfinance services delivery to customers.

These meetings helped us learn more about the microfinance industry in Ghana and set us up for a successful project launch. The Transparent Pricing Initiative in Ghana was launched on Friday, 25^th February, 2011 at the African Regent Hotel in Accra. The launch was a big success with great representation from 44 different MFIs and a total of 102 participants! Guest speakers for the occasion were Dr. Andah (Executive Director of GHAMFIN), Mr. Amoah (Director, Microfinance Unit, Ministry of Finance and Economic Planning) and Mr. Asad Mahmood (Director, Community Development Finance Group, Deutsche Bank). Ms. Alexandra Fiorillo (Vice President, MFTransparency) gave 2 presentations on the Transparent Pricing Initiative in Ghana, including training on the calculation and communication of transparent prices.

Following the workshop we had a meeting with representatives of the Microfinance and Small Loans Center (MASLOC) who gave us an interesting overview of microfinance sector in Ghana and their goal to become the one-stop microfinance wholesale lender to MFIs in the country. Set up under the direction of the governing board, MASLOC is tasked to undertake the necessary reforms and development measures to strengthen the microfinance industry as an effective and viable strategy for poverty reduction. MASLOC also advises the Government on policies to enhance the development of a decentralized microfinance system that is integrated with or linked to the formal financial system, so as to enhance sustainable growth.

Following the workshop in Accra, four MFTransparency staff traveled to Tamale, in the Northern Region of the country, to prepare for the second launch workshop. This workshop gathered the local microfinance industry players with active participation throughout the training. Interesting questions such as the following two were raised and discussed:

1. Does MFTransparency have tools and processes to deal with scenarios where a donor decides the rate at which MFIs should lend? The example given was of the Millennium Development Account (MiDA) which offers loans to MFIs but sets a condition of not lending out more than 30% per annum. Ms. Fiorillo explained that the data tools that MFTransparency uses are always being developed to meet new circumstances, such as this one, that we encounter in different country projects and that yes, our tool does allow for this specific case. The MFTransparency tool does allow us to indicate if a specific lender has fixed an MFI’s lending rate to borrowers.

1. Information technology is less developed in the northern part of Ghana, so how would MFIs, especially those without regular internet services, share information presented by MFTransparency? Ms. Fiorillo’s answer was that information sharing at its most basic level does not require complicated IT solutions or the computer but rather coordination among the concerned parties. MFTransparency staff take care to spend time with each MFI in its office to support them through the data collection process.

Data collection processes started immediately after the workshop in Tamale with the first two MFIs who could not wait to get started!  We now have more than 20 MFIs participating in the Initiative by submitting data on their microloan products. The first five MFIs to complete this process will receive a special recognition in the form of a press release highlighting the leaders in transparent pricing in Ghana. MFIs seem motivated by this competition to be among the first five. Regardless of who makes the first five, we are happy to have these many MFIs participating in the Initiative. I can’t wait to see how the Initiative progresses!