April 24, 2007

"HFC's 'Boafo' Micro Finance Service up and Running"

Professor George Gyan-Baffour, a Deputy Minister of Finance and Economic Planning, has commended HFC Bank (Ghana) for striving to complement government efforts at providing financial services to improve the lives of low and moderate-income entrepreneurs and salary earners in the informal sector.

The minister gave the commendation when he inaugurated Boafo Microfinance Service Ltd (Boafo), the latest subsidiary of the HFC Group in Accra last Friday.

He said with the fight against poverty assuming international dimensions, the microfinance concept is one intervention that has been noted to promote wealth creation, which in the long run leads to poverty reduction.

Boafo Microfinance Service is a joint venture between HFC Bank (Ghana) and the Cooperative Housing Foundation (CHF) of the USA.

It aims at extending financial services to low and moderate income Ghanaian households in their pursuit of shelter, business, and other opportunities.

Prof. Gyan-Baffour lamented that many micro credit schemes initiated in the country have failed to make substantial impact on poverty reduction because of high default rate on the part of beneficiaries.

Other obstacles included poor implementation arrangements, lack of capital, lack of professionalism and expertise, lack of coordination and poor monitoring on the part of the service provider.

Said he, “the government therefore welcomes private sector participation in the micro-finance sub-sector to complement its efforts and further boost the opportunities of economic agents in the sector. Hence, HFC’s partnership with CHF International to provide financial services at the grassroots is a laudable and well-thought out strategy and I commend it”.

The minister expressed the hope that the professional expertise of HFC, coupled with CHF’s international experience and competence will be brought to bear on the bottlenecks in micro-finance development in Ghana and ensure that the scheme makes an impact on the economy.

He urged Boafo to target micro scale retailers, grassroots productive units and vocational workers such as petty traders, artisans and hairdressers, but cautioned the partners to put in place in built mechanisms to ensure that loans get to the productive sector and are repaid to sustain the scheme.

The Managing Director of Boafo, Mr. Michael Osegge, said with Boafo, loans and savings facilities are tailor-made for the target clients. Loans will be in the range of 5,000,000.00 cedis and 100,000,000.00 cedis per person with a minimum savings account of 100,000.00 cedis.

He said though the scheme starts in Accra , it would soon be operative in all HFC branches across the country namely, Tema, Takoradi, Techiman and Kumasi for now. The Managing Director of HFC Bank, Mr. Asare Akuffo, said this important microfinance venture is unique not only in Ghana but in the world at large.

He said it is very rare to find banks directly participating in microfinance. Nonetheless, Mr. Akuffo expressed optimistim about Boafo, saying in the past, loans granted by HFC Bank to micro business customers had been repaid with no default at all.

Specific branches of HFC Bank would be dedicated to microfinance operations under the auspices of Boafo.

A representative of CHF International, Dr. Judith Hermanson, said in establishing and launching Boafo, the partners recognize and celebrate the immense contribution that low and moderate-income earners and those working in the informal sector do make and can make to the economy of Ghana.

CHF is an international humanitarian and development organization currently operating in more than 30 countries around the world.

Learn more about CHF's Development Finance operations.