Question

If you are to advise MFIs in Ghana in their quest to attain reasonable financial sustainability and outreach, what will be your advice and why?

Answer 1

My advice to micro financial industries in Ghana would be as follows in order to survive and sustain in the long run-

A. Issuing of loans to those corporations who have high credit worthiness and who are expected to default lesser on their loans.

B. Past performance of these corporation needs to be accounted before issuance of any loan.

C. Asset quality of the micro financial institution need to be kept higher in order to sustain and survive through adverse economic conditions.

D.there should be a higher level of liquidity on overall books of accounts of micro financial institution so that they can survive and sustain through liquidity crisis.

E. They should always be keeping a concern about matching of maturity of loans because they should never fund long term loans with short term capability and short term loans with long term capability of borrowers.

F. Capital adequacy ratio of these organisation must be kept in order to avoid any kind of liquidity crunch and lack of capital in long run

G. Rules and regulations along with proper disclosure requirements must be followed by micro financial organisation in order to avoid any kind of legal procedures .

H. Risk exposure of these micro Financial institutions needs to be e calculated properly so that they do not have exposure in very highly risky assets as they can hurt the the profits of the company to a large extent.