Dr Sam Ankrah calls for governance-led transformation of African Microfinance

Economist Dr Sam Ankrah has urged African countries to reposition microfinance as a viable and competitive investment asset class rather than treating the sector as a charitable initiative.

Dr Ankrah made the call on Thursday, August 6, 2026, when he delivered the keynote address at the International Microfinance Investors’ Summit 2026 in Accra.

The two-day event, organised by the Financial Inclusion Advocacy Centre (FIAC) and its partners, was held on the theme, “Repositioning Microfinance for Investment, Growth and Stability.”

The summit brought together key stakeholders from across the African financial sector, including senior officials from central banks, ARB Apex Bank, GHAMFIN, the Credit Unions Association (CUA), rural and micro-credit associations, as well as representatives from Nigeria, Sierra Leone, Liberia and The Gambia.

Dr Ankrah said the challenges confronting Africa’s microfinance industry were not unique to any single country but reflected a broader continental problem requiring coordinated solutions.

“We are not having a Ghanaian conversation this morning,” he said, noting that similar discussions had recently taken place in Lagos and were also happening in Dakar, Abidjan, Nairobi and Kigali.

According to him, a sustainable microfinance industry depends primarily on three interconnected pillars — strong governance, institutional competence, and effective regulation and supervision.

“Governance, plus competency, plus effective regulation and supervision, equals a resilient and robust microfinance ecosystem,” he stated.

He argued that capital should not be regarded as the starting point for building strong microfinance institutions. Instead, he said, investment capital naturally follows when institutions demonstrate sound governance, competence and effective oversight.

Dr Ankrah highlighted the importance of microfinance to Africa’s largely informal economy, citing International Labour Organization figures which estimate that about 86 percent of employment in Sub-Saharan Africa is informal.

The proportion, he noted, exceeds 90 percent in Central and West Africa.

He further referenced International Finance Corporation (IFC) estimates that the financing gap facing small businesses in the region stands at approximately $331 billion.

He described the figure as being roughly equivalent to the annual economic output of South Africa, underscoring the enormous opportunity available to financial institutions and investors.

However, Dr Ankrah warned that weak corporate governance remains one of the biggest threats to the survival of microfinance institutions across the continent.

He cited the situation in the West African Monetary Union, where 533 institutions serve approximately 19 million customers, but portfolio-at-risk had reached 8.9 percent at the end of 2024, significantly above the 3 percent regulatory ceiling.

Nine institutions in the region, he added, were under administration.

He also pointed to Nigeria, where 225 microfinance bank licences were revoked in two separate exercises, and Ghana, which revoked the licences of 347 institutions in 2019.

Kenya’s microfinance banking sector, he said, had also recorded losses for nine consecutive years.

Dr Ankrah argued that these failures could not simply be blamed on inadequate capital.

“None of those institutions failed because the minimum capital was too low,” he said.

He attributed the collapses largely to governance weaknesses, particularly situations where institutional decisions were influenced by dominant owners.

He described Ghana’s introduction of ownership caps as an important measure aimed at addressing one of the structural weaknesses that has contributed to institutional failures across Africa.

On institutional capacity, Dr Ankrah cautioned investors and industry players against assuming that increased capital automatically translates into stronger institutions.

He noted that while additional capital can be mobilised within a relatively short period, building competent management teams, effective boards, reliable risk-management systems and functional management information systems takes considerably longer.

He questioned whether some institutions were strengthening their internal systems at the same pace as their balance sheets, noting that several still struggled to produce audited financial statements, portfolio ageing reports and board minutes when required.

Dr Ankrah also called for stronger regulatory supervision, stressing that creating rules was different from ensuring that financial institutions actually complied with them.

“Regulation is writing the rule. Supervision is knowing, continuously, whether the rule is being followed,” he said.

He urged regulators across Africa to move beyond a heavily compliance-driven approach and adopt more effective risk-based supervision.

Using Kenya as an example, he noted that the number of digital lenders had increased from 32 to 85 while assets held by supervised microfinance banks had fallen to their lowest level in a decade.

He said regulators needed to strengthen their capacity if they were to keep pace with the rapidly changing financial services landscape.

Ghana’s microfinance reforms

Turning his attention to Ghana’s ongoing reforms, Dr Ankrah outlined several measures he believes could improve investor confidence in the sector.

He called for the publication of clear data on the consolidation process, arguing that investors need reliable information to assess opportunities and risks.

“Investors cannot price a consolidation they cannot see,” he said.

He also urged regulators to release governance directives ahead of capitalisation deadlines to enable institutions to prepare adequately.

Dr Ankrah stressed that raising minimum capital requirements alone would not guarantee financial stability, citing experiences in Nigeria and India as evidence that institutional conduct, governance and supervision were equally important.

He further highlighted the growing role of technology in transforming financial services across Africa.

According to him, Africa processed approximately $1.1 trillion in mobile money transactions in 2024, representing about two-thirds of the global total.

He said account ownership in Sub-Saharan Africa had increased from 34 percent in 2014 to 58 percent in 2024, creating a growing pool of financial data that could potentially support improved credit assessment and lending decisions.

However, he cautioned that digital technology could also magnify existing weaknesses.

“A badly governed institution that digitises simply makes bad loans faster,” he warned.

He cited Kenya’s rapid digital credit expansion and Rwanda’s transition from traditional cooperatives to mobile wallets as examples of how technological change can significantly alter financial markets.

Funding remains available

Dr Ankrah said the problem facing African microfinance was not necessarily a shortage of global capital but the limited number of institutions capable of attracting and deploying that capital effectively.

He said global microfinance-focused investment funds control approximately $23 billion, while Africa-focused impact funds hold about $18.6 billion.

Yet only about $692 million, or roughly 4 percent, of the latter is invested in microfinance.

He said African funds also tend to maintain higher loan-loss provisions and larger cash holdings because of difficulties in identifying institutions that meet investment requirements.

According to him, blended finance could help bridge the gap between available capital and investable opportunities.

He noted that across more than 300 blended-finance transactions, every $1 in concessional funding had mobilised approximately $4.10 in commercial capital.

He also identified foreign-exchange risk as a major obstacle to investment in African financial institutions and pointed to existing mechanisms such as TCX, which has hedged more than $17 billion, as well as the African Guarantee Fund.

For institutions seeking recapitalisation, he proposed several alternatives, including rights issues, strategic equity investment, diaspora funding, subordinated and mezzanine debt, convertible instruments and holding-company structures.

He also encouraged industry associations to develop pooled regional investment vehicles capable of attracting larger institutional investors.

Governance remains key to investors

From an investor’s standpoint, Dr Ankrah said several recurring problems were responsible for otherwise promising deals being rejected.

These included delayed or unsigned financial statements, inconsistent portfolio-at-risk figures, family-dominated boards, undisclosed related-party transactions and business proposals that focused heavily on market size without adequately addressing institutional risks.

“Not one is a capital failure,” he said. “Every one is a governance or competency failure.”

He therefore called on regulators to improve data transparency, carefully sequence reforms and provide adequate resources for effective supervision.

Microfinance institutions, he said, must be realistic about their future, including being willing to consider mergers where necessary, while strengthening governance before seeking additional capital.

He urged investors and development finance institutions to provide blended financing structures alongside technical assistance, while calling on industry associations to develop sector-wide training programmes and pooled financing facilities.

Dr Ankrah concluded by stressing that the challenges and opportunities facing microfinance institutions were largely similar across the continent.

“From Dakar to Nairobi, from Addis to Accra, the pattern is identical,” he said. “Capital follows governance. Supervision must match ambition. And digitisation without risk management simply accelerates the losses.”

The International Microfinance Investors’ Summit is expected to develop a roadmap aimed at supporting the consolidation of microfinance institutions, improving regulatory supervision and increasing the flow of blended finance into the sector as part of efforts to promote investment, growth and stability.

Prince Antwi

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