Funding MSMEs in Ghana

Leverage technology to expand funding of MSMEs to cover locations beyond our catchment area.

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Summit Vision Microfinance Services Ltd (SVMFS) is a Bank of Ghana Licensed Non-Bank Financial Institution mandated to provide microfinance services to individuals and MSMEs. The company was incorporated in August, 2010 and opened its door for business to the general public in January, 2011.

SVMFS has been operating from our headquarters in Kaneshie, Accra since 2011 and has been working with a small holder farmer Cooperative at the Offinso North District in Ashanti Region since 2017 and village saving and loan groups Tepa in Ahafo Ano North Region.

SVMFS has a customer base of 6,000 in Accra, in places like Kaneshie, Bubuashie, Abossey Okai, North Kaneshie, Odorkor, Darkuman, Official Town, Kokompe, Atico, Sukura, Latebiokoshie, Kasoa, Amasaman, Alajo and surrounding areas. SVMFS’ has 11,000 customers who are all members of the small holder farmers’ cooperative in the Offinso North District of the Ashanti Region and also 2,000 small holder farmers who are operating as village saving and loan groups in Tepa.

The traditional way of using people to mobilize small deposit and advance small loans to individuals by microfinance companies comes at substantially high cost per amount (Cedi) mobilize or lent as compared to relatively bigger amounts by commercial banks.  The tier 2 microfinance sector in Ghana has recorded heavy losses in the past due to this high operational cost of serving these smaller ticket customers with mobile bankers. However, there still exist a genuine sustainable and profitable case of financial inclusion for these low income earners since bigger portion of the economically active in the country are within this bracket.

To reduce cost, to be one of such profitable and self-sustaining microfinance company, SVMFS has explored and experience success in adopting the group approach to mobilize savings and advance loans. The cost per amount (Cedi) has reduce considerably ever since, as same and in some cases lesser time and human resources are employed to engage 25 to 100 people at a go instead of the one customer at a time in the past.

SVMFS again decided to leverage technology to expand our operations to cover locations beyond our catchment area.  In our search for a cost effective and reliable digital solution brought us in touch with entities with the same vision of extending financial services to low income earners. SVMFS is now a Partner Financial Institution (PFI) under the MasterCard Foundation sponsored Savings at the Frontiers (SatF) Project being implemented by Oxford Policy Management in collaboration with Emergent Payments (formally Interpay) which is aim at improving the financial inclusion of low income individuals and communities in Sub-Sahara Africa. This SatF project seeks to bridge the gap between the supply of formal financial services and the informal saving mechanism (ISM), so that user of ISM, mostly village saving and loan groups, cooperatives and credit led saving groups can have greater choice and use of formal financial services. The accounts of these low income individuals and groups with SVMFS have been linked to their dedicated mobile money wallets to allow them to deposit/invest or withdraw from their accounts and repay loans from the comfort of their localities.

 SVMFS has extended loans to a credit driven groups in Kasoa Market who provided a cash back collateral of 10% of the principal advanced. The repayment of this credit driven is weekly and recovery has been 100% so far. The remarkable recovery record is due to the group guarantee that uses peer pressure to instill creditworthiness. We are also working with village savings and loans groups mostly in Tepa, Ahafo Ano North District and cooperative in Offinso North District who are mostly small holder farmers.

The ultimate vision of SVMFS which also has the buy in of our partners is to enable most of the members of these groups to graduate from the group platforms to access financial services that fits their own peculiar needs or remain members of the group and still have access to financial services as individuals in addition.  As an incentive for graduation they respond to the motivation to save. We are witnesses to the entrepreneurial prowess of some of these individuals and with access to financial services we are confident that they will be empowered to prosper.

The groups have been organized and the digital platform to reach them is in place, SVMFS needs funds to on-lend to scale up our engagement with these low income earners. SVMFS is seeking for funds between USD$ 500,000 to USD$ 1,500,000 to complement our working capital to on-lend to these cooperatives, credit driven groups and village savings and loans groups. We intend to advance loans to the first 160 groups of 5 who are mostly market women. Each group requires USD 3,000 which are share at an average of USD$ 600 per a member. 800 people are going to be served in the first phase out of the anticipated 2,500 people when all the funds are secured.

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