Ghana has a population of 25.4 million, of which 28.6% lives on less than USD 1.25/day. The government of Ghana recognizes microfinance as an important tool for poverty reduction, linking the overall policy framework for microfinance with the poverty reduction strategy for the country. Currently, there are approximately 394,000 active borrowers and 82 MFIs in Ghana.
Ghana’s financial sector is divided into three sub-sectors: formal, semi-formal and informal. The formal sector includes commercial banks, nonbank ﬁnancial institutions (NBFIs), rural and community banks (RCBs) and savings and loans companies. There are about 23 major banks in the country, including three development banks, four commercial banks, and 16 universal banks. The formal financial sector in Ghana is dominated by these commercial banks. However, these banks reach only 5% of the households, thereby excluding a large section of the population.
Bank of Ghana (BoG) is the apex banking institution, and one of its functions is the promotion of innovations in payment products such as branchless banking, to ensure financial inclusion for the unbanked population and the country’s large informal sector.
In the 1950s, the Ghana Government started providing subsidized credit to address poverty. In the 1960s -70s, NGOs started providing microcredit. The formalization of MFIs in the1990s set off the commercialization of microfinance and the mainstreaming of MFIs into the financial sector.