Ghana’s savings and loans industry has endorsed the Bank of Ghana’s (BoG) planned microfinance sector reforms. However, the industry warns that a poorly managed transition could severely impact depositor protection, threaten jobs, and restrict credit access for households and small businesses. These entities heavily rely on specialized financial institutions for their financial needs.
Tweneboah Kodua Boakye, Chief Executive Officer of the Ghana Association of Savings & Loans Companies (GHASALC), stated the industry accepts the need for stronger regulation. He emphasized improved governance and more resilient institutions are crucial. Mr. Boakye insisted that the implementation must be realistic and sensitive to the vital economic role played by lower-tier lenders. He highlighted the importance of sustainable institutions, confidence building, and protecting depositors and jobs.
This warning is significant due to the sector's substantial scale within Ghana's financial landscape. Deposits mobilized by savings and loans companies grew from GHS 6.10 billion in 2024 to GHS 8.54 billion in 2025. Similarly, credit extended to households and businesses increased from GHS 5.65 billion to GHS 7.24 billion over the same period. This places billions of cedis in household savings and business financing directly within the scope of these regulatory changes. The reforms could reshape licensing, capital requirements, institutional identity, and the number of firms operating in the market.
GHASALC's argument is not against stronger regulation itself. Instead, it advocates for an implementation approach that avoids inadvertently destabilizing viable institutions. It also seeks to prevent reducing access to finance for customers who have limited options within the formal banking system. Mr. Boakye articulated this position, stating, “We support the destination; we must work together on the journey.” This statement captures the central policy challenge facing the Bank of Ghana.
Regulators aim for institutions with stronger balance sheets, better governance, and improved risk management. They also seek greater capacity to absorb financial shocks. However, the transition to these objectives can create instability if capital thresholds, liquidity expectations, or compliance costs rise too quickly. Firms may struggle to restructure under such rapid changes. Savings and loans institutions typically serve households, traders, and micro, small, and medium-sized enterprises (MSMEs) more closely than traditional banks. Their customers often have limited collateral, less formal documentation, or more volatile income patterns. This makes them less attractive to conventional lenders.
If reforms lead to significant consolidation or institutional exits without adequate transition mechanisms, Ghana could face a dilemma. The country might end up with fewer but stronger institutions. Simultaneously, it could weaken the crucial financing channels available to the very customers the sector was designed to serve. The industry’s own figures underscore this trade-off. While deposits and lending expanded strongly in 2025, non-performing loans (NPLs) improved only marginally. NPLs declined from 15.00% to 14.00%. This indicates the industry enters the reform period with expanding balance sheets but persistent credit risk. They also face pressure from funding costs, liquidity management, technology expenditure, and regulatory compliance.
For regulators, these factors strengthen the case for reform. For operators, they strengthen the argument for careful sequencing of changes. A financial system with weak institutions can endanger depositors. However, a reform process that triggers unnecessary failures can also harm depositors, employees, and borrowers. The critical test for the regulatory overhaul is its ability to distinguish between fundamentally unsustainable institutions and those that are viable but require time, capital, or restructuring to meet higher standards. GHASALC has already begun preparing for a significantly different industry structure. Members unanimously voted to restructure the Association under the emerging regulatory framework. A new identity is expected from January 2027. The Association is moving towards becoming the Ghana Association of Microfinance Banks, pending final approval of the institutional category by the Bank of Ghana.