I worked with the Ghana Association of Microfinance Companies for eight years. During that time, I gained valuable knowledge in finance, risk management, leadership, social performance, and customer relations.
One day, however, the Secretariat received the shocking news that many of our member companies had been closed down. According to the Bank of Ghana, the action was necessary to protect the industry and the public.
Even before the clean-up exercise, some companies had already collapsed. I felt deeply saddened by these developments and hoped such incidents would never happen again.
Unfortunately, the Bank of Ghana has announced that microfinance companies must meet a new stated capital requirement by the end of 2026. This announcement has brought back memories of one of the most difficult periods in the history of the sector.
A few days ago, the Board Chair of the Ghana Association of Microfinance Companies called on the Bank of Ghana to reconsider the timeline for meeting the new capital requirement. Having witnessed the effects of the previous clean-up exercise, I understand her concerns.
Almost a decade has passed, yet the memories remain fresh. Many workers lost their jobs. Others lost their life savings. Some companies lost their reputation, while many families faced hardship. A once-promising industry was reduced to only a few surviving institutions.
The crisis did not happen overnight. Some companies expanded too quickly without proper planning. Others charged very high interest rates. Greed, poor risk management, weak leadership, and failure to prepare for difficult times also contributed to the collapse.
I vividly recall a training session where a consultant warned some microfinance companies that they risked collapse if they continued to operate below acceptable standards. Unfortunately, the warning fell on deaf ears.
Despite the pain, important life lessons can be learned from this experience.
Seek expert advice
One important lesson is the need to seek advice from people who have knowledge and experience. No one knows everything. There will always be people who know more than we do.
Whether in business, relationships, education, spirituality, or personal growth, it is wise to learn from others. Pride often prevents people from asking for help, but seeking advice is a sign of wisdom, not weakness.
Those who listen, learn, and apply good advice are more likely to make sound decisions. When faced with challenges, do not be afraid to talk to mentors, teachers, advisors, and experienced people. Asking questions helps us learn and avoid costly mistakes.
Be your neighbour’s keeper
Another lesson is the importance of caring about others. When some microfinance companies began to fail, others seemed unconcerned. They believed the collapse of their competitors would benefit them. However, they soon realised that when people lost trust in one company, they began to lose trust in the entire industry.
The lesson is simple: what affects others can eventually affect us too. Instead of celebrating the problems of others, we should support and encourage them.
This principle is important not only in business but also in our communities. A society becomes stronger when people help one another. Good relationships promote cooperation, learning, and mutual support. When we help others succeed, everyone benefits.
Be trustworthy
Trust is one of the most valuable things a person or organisation can have. Many customers saved their money with microfinance companies because they believed their money was safe. Unfortunately, in some cases, that trust was broken. Once trust is lost, it is very difficult to regain.
This lesson applies to all areas of life. Whether at home, in school, at work, or in business, honesty is important. We should always mean what we say and say what we mean.
Trust takes years to build but can be destroyed in a moment. This is why honesty should never be sacrificed for short-term gain. People may admire wealth and success, but they respect honesty and integrity even more.
Live within your means
Another lesson from the collapse is the importance of living within our means. Some companies focused too much on appearances. They bought expensive vehicles, spent heavily on publicity, and maintained costly operations while neglecting more important matters.
There is nothing wrong with wanting a better life, but we should not try to impress others by spending beyond our means. Such behaviour often leads to debt, stress, and poor decisions.
Social media often creates pressure to appear successful, causing many people to spend beyond their means. However, financial discipline remains one of the keys to long-term success. True success is not about showing off. It is about stability, discipline, and making wise choices.
Avoid unhealthy competition
Some microfinance companies tried to compete with larger and more established financial institutions. In doing so, they spent money they could not afford and lost focus on their main purpose.
This teaches us an important lesson. Life is not a competition. Constantly comparing ourselves with others can make us unhappy and distract us from our goals.
Healthy competition can motivate people to improve themselves. However, unhealthy competition can lead to envy, poor decisions, and unnecessary risks. Instead of focusing on what others have achieved, we should concentrate on developing our talents and making the best use of the opportunities available to us.
Everyone’s journey is different. Rather than competing with others, we should focus on improving ourselves and moving forward step by step.
In conclusion, the collapse of some microfinance companies was painful, but it also provided valuable lessons for institutions, regulators, and individuals. If we learn from our mistakes, failure can become a stepping stone to future success.
As the Bank of Ghana continues its efforts to strengthen the financial sector, it is my sincere hope that microfinance companies will become stronger, wiser, and more stable.
More importantly, may all of us learn from the rise and fall of the industry. When an industry teaches humanity, the lessons are often too valuable to ignore.
WRITTEN BY
Henry Atta Nyame
Institutional Assessment Practitioner
hattanyame@gmail.com
Editor’s note: Views expressed in this article do not represent that of The Chronicle
