Effects of Covid-19 on Savings and Loans and Microfinance industry

The Savings and Loans and Microfinance industry on Tuesday took their turn in the Covid-19 Webinar series being organised by Krif Ghana Limited which took place on Tuesday 21st July, 2020.

The four previous editions focused on The Effects of Covid-19 on Corporate Ghana, the Banking Sector, Rural Banks and the Insurance Industry respectively.

In this 5th Webinar the series, The Savings and Loans and Microfinance industry grabbed the opportunity to explain the role they are playing in supporting their stakeholders through the crises and recovery.

The event themed : “Effects of COVID-19 on Corporate Ghana- The Savings And Loans And Microfinance Industry”  featured experts such as the Chief Executive Officer of Eman Capital Microfinance  Mr. Lambert Osei Kofi, who doubles as the Board Chairman of the Ghana Association of Microfinance Companies, Mr. Johnson Boadi Asamoah, the Managing Director of Golden Pride Savings and Loans, Mr. Nii Amankra Kwashie Tetteh, the Chief Executive Officer of Bayport Savings and Loans and Ms. Amma Frimpomaa Dwumah, the Managing Director of SIC Life Savings and Loans.

In his welcome address, the Editor-in-Chief/Publisher of Integrity Magazine described it as an honour to host such key representatives of the industry on the 5th webinar project, which has become one of the most popular events being held within this period, in the corporate world.

He stated that the webinar would be an opportunity for leaders in the Microfinance, Savings and Loans industry to share the key role Microfinance and Savings and Loans companies’ play, in supporting their customers and how they as an Industry have been affected by the Corona virus pandemic.”

According to a bank of Ghana report, for the first quarter of 2020, the Ghana’s financial sector recorded an increase in cash withdrawals largely due to the pandemic and its impact.

Their report also showed that though banks have been able to withstand the COVID-19 pandemic, Specialized Deposit-Institutions (SDIs) such as Savings and Loans Companies and Microfinance firms have been hit hard.

Speaking on the Effects of Covid-19 on the Microfinance Industry in the country, Mr. Lambert Osei Kofi revealed that the pandemic in the early stage of the year caused the decline in savings and deposit mobilization as a result of clients, especially those operating in the informal sector, not being able to work fully and therefore unable to save adequately.

“A recent survey conducted by the microfinance network has shown that the Savings amount declined from GHS1,116,992,304 at the end of February 2020 to GHS 1,060,524,561 by April 15, 2020 representing a GHS56.47 million decline,” he said.

He however said there is an emerging positive outlook for the industry, recommending that company boards should have a continuous intensive client engagement and must adopt appropriate Digital Delivery Channels.

“The good news is that deposit mobilization in microfinance institutions seemed to be on the rise again,” he added.

The Managing Director of SIC Life Savings and Loans, Ms. Amma Frimpomaa Dwumah explained that the pandemic had changed the dynamics of the markets and has highlighted additional risks to their operating, investing and financing activities as savings and loans companies.

“These risks have triggered various innovative solutions from players within the industry and re-arranged our priorities as well. We are yet to evaluate the immediate results of our responses. In the long run it may be good or bad but we are not sure yet. There is the need to innovate around these dynamics to ensure sustainable long term profitability of our companies.” She said.

In Ghana, estimated GDP growth is set to nose dive from a target of 6.8% to about 2.6% in 2020, according to expert analysis.

Looking at how Savings and Loans can operate successfully amid the pandemic, the Managing Director of Golden Pride Savings and Loans, Mr. Johnson Boadi Asamoah, urged industry players to specifically identify their peculiarities from that of the conventional banks.

He recommended further dialogue between policy makers and sector representatives such as the Ghana Association of Savings and Loans Companies and Ghana Association of Microfinance companies during this crisis period,” he said.

Mr.BoadiAsamoah mentioned that one key difference between mainstream banks and Savings and Loans (S&L) is that most banks rely on asset-based lending, whereas S&Ls primarily depend on a close relationship with each borrower and client incentives to repay in order to access future loans.

He gave further recommendations, which he said were in line with protecting low-income households and their livelihoods from the harsh effects of the pandemic and could be implemented at the regulation and policy level”.

The recommendations he gave included, enabling S&Ls to operate safely, providing relief to microfinance clients, making additional liquidity available to S&L’s, deferring non-critical supervisory processes, restructuring or consolidating troubled S&L’s and balancing urgent rescue against longer-term values such as legal certainty, risk-based regulation, and sustainability.

He added that: “people needed access to their savings and S&Ls, especially those that accept deposits (Susu etc.), should to the extent possible maintain a minimum level of operations while heeding to safety protocols”.

So far Integrity Magazine, under the auspices of Krif Media Limited and Krif Ghana Limited, through these webinars, has brought on board, close to 300 stakeholders made up of Ambassadors, the Diplomatic Corps, Top Government Officials, Representatives from the Bank of Ghana, the heads of the Chartered Institute of Banking, the Ghana Association of Bankers, Chief Executive Officers, Managing Directors of the Commercial Banks, Rural Banks, Insurance Companies, Savings and Loans and Microfinance Companies in Ghana, Association of Rural Banks, The Deputy Commissioner of Insurance, the Chairman of the Insurance Brokers Association of Ghana, the Chairmen of the Ghana Associations of Savings and Loans and Ghana Association of Microfinance Companies and many other dignitaries as well as the Media.

Ever since the novel coronavirus hit the country, Integrity Magazine & Krif Ghana Limited has been in the forefront, providing the platform for the corporate sector to deliberate on measures and available opportunities that they can explore in the midst of the challenges.

The first webinar, which focused on the Corporate Ghana in general, was held in May, with Reverend Kennedy Okusun and Mr. Michael Osikoya painting a very bright picture of the country’s future amidst the pandemic.

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The second webinar in June was on the theme: Effects of Covid-19 on Corporate Ghana; the Banking Sector, where experts such as Mr John Awuah- Deputy CEO of Ghana Association of Bankers, Rev. Mrs Patricia Sappor the President of Chartered Institute of Bankers, Mrs Marufatu Abiola -Regional CEO for West Africa- United Bank for Africa and Mrs Mary Brown the former Deputy Managing Director of Prudential Bank, analysed the available opportunities for the banking sector, with calls on banks to adopt new ways of operation.

The 3rd edition of the Integrity Magazine Webinars focused on Rural Banks, featuring Dr Alex Asmah the CEO of the Wassa Akropong branch of Amenfiman Rural Bank and Mr Kennedy Obiri Yeboah, who is the Board Chairman of Okomfo Anokye Rural Bank, Kumasi.

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Having covered the major financial institutions, Integrity Magazine turned its attention to the insurance sector in the 4th webinar, with the call on Ghanaians to “be interested in insurance”.

This 5th edition of the Webinar Series on Savings and Loans and Microfinance Companies in Ghana will surely not be the last, as Rev. Kennedy Okosun, the Executive Chairman of Krif Ghana Limited, and Editor of Integrity Magazine has assured the general public of more exciting events which will be held within the 2nd half of this year.

Krif Ghana Limited are dealers in quality office equipment and office stationery and have been in existence for the past 33 years in this country.