This sector is made up of Micro-Finance Institutions (MFIs) and Saving and Loans (S&L) companies in the country.

This is coming months after the government spent some GHC12billion in cleaning up the banking sector.

According to the IMF, that intervention in the S&L and other finances houses alone will cost the taxpayer GHC3billion, while for the MFIs it will cost GHC1billion.

This means the total amount to be spent on securing deposits in the banking and allied financial intuitions sectors will be approximately GH¢16billion, which is equal to half of the country’s annual tax revenue.

The IMF report said that it is important that the government looks for funds to complete what it calls ‘the financial sector reform strategy’. 

“During 2018, the BoG conducted an analysis of microfinance institutions (MFI) and rural banks in cooperation with the World Bank, identifying a large number of institutions which warrant prompt intervention to protect depositors and enable the sector to contribute to financial sector development and inclusion.”

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison The Governor of the Bank of Ghana (BoG), Dr Ernest Addison

“A clean-up of the savings and loans companies and finance houses also showing signs of distress will complete the financial sector reform strategy. The BoG is finalising plans to intervene with distressed institutions; the sector’s clean-up will require the mobilisation of government funding to cover resolution costs (as a first step, funding for MFIs is being secured),” the IMF report added.

Even though the needed amount is now clear, it unknown how the Bank of Ghana will go about the exercise.

However, the Governor of the Bank of Ghana, Dr. Ernest Addison, has said that “the modalities will become clearer when the time approaches”.

In September 2018, he hinted that in the worst-case scenario, insolvent non-bank financial institutions will be liquidated as happened to the five banks last year.

“We are discussing with the Ministry of Finance the measures which need to be taken to stabilise that segment of the market. Measures for stabilising the savings and loans segment of the financial market are no different from the measures which have been taken with regard to the banks. If these savings and loans companies are insolvent, they will have to be liquidated; that is the solution for insolvent financial institutions,” he said.