**Table 3.** Comparison of Ghana’s Rural Banks and Credit Unions with African MFIs, End of 2000

|_Indicator (average)_|_African MFIs_<sup>_a_</sup>|_Ghanaian rural banks_|_Ghanaian credit unions_|
|---|---|---|---|
|Number of clients|7,374|8,488|405|
|Average loan balance outstanding per client (US$)|119|30|153|
|Total loan portfolio (US$)|690,027|251,924|65,180|
|Total assets (US$)|1,612,029|841,102|110,961|
|Capital/assets (percent)|60.3|2.6|3.5|
|Return on assets (percent)|-16.1|4.4|n.a.|

n.a. Not applicable. _Note:_ Ghanaian S&Ls are not included. a. Leading MFIs that report to the _MicroBanking Bulletin_ . _Source:_ Kowubaa, Ltd. (2000, p. 60).

42. **_Savings and loan companies._** The first S&L license went to Women’s World Banking Ghana in 1994, representing the first transformation of an NGO into a licensed financial institution. Its success, however, has been limited, and a number of S&Ls are suffering from portfolio problems and having difficulty complying with central bank regulations. Some of them represent entrepreneurs with little experience in financial services, but with surplus funds and high motivation. Sinapi Aba <mark>Trust is expected to become the</mark> second transformed NGO, and EMPRETEC, an NGO that provides excellent training for microenterprises and small businesses, is also trying to meet the paid-up capital requirement needed to be licensed as an S&L.

43. **_Credit unions._** The past weak financial performance of credit unions has been due in large part to their organization as cooperative societies with a welfare focus, and in particular to their policy of low interest rates. In recent years Ghana’s Cooperative Credit Union Association (CUA) has moved to improve the commercial orientation and financial reporting of its primary societies, as well as its own financial sustainability. The <mark>CUA is an innovator in providing both credit insurance, which pays</mark> off the outstanding loan balance in case of the death of a borrower, and a contractual savings program, which matches savings, up to a limit, if held at death or to maturity. Nevertheless, Credit unions are relatively small, with an average of 400 to 500 members per society, although theUS$153 average loan size is well above that for African MFIs, as well as for RCBs.<sup>5</sup> 44. Since 1989 the government has launched several special credit schemes, usually at subsidized rates, that have generally reached few people and have had extremely poor recovery rates. Microcredit schemes have also been used in poverty alleviation programs and the district assembly common funds. In 2001 <mark>the government</mark> launched the <mark>Emergency Social Relief Project to provide US$57 million in business loans during 2002–04 to the economically active poor at a 20 percent annual interest rate. The RCBs and NGOs through which disbursements are made often do not have autonomy in selecting the beneficiaries. The main threat to sustainable microfinance from these government programs comes from the negative effects on MFIs’ efforts to mobilize savings and to collect on loans from borrowers whose willingness to repay is typically low when they perceive loans as coming from government or donor funds at subsidized rates.</mark>

# **_Tanzania_**

45. The principal institutional providers of microfinance services include the National Microfinance Bank and two other commercial banks that have established internal divisions dedicated to microfinance, the Tanzania Postal Bank and three regional and rural unit banks that fall under the NBFI category; urban-

> 5 This is probably because 59 percent of the credit unions are workplace based, with 71 percent of the CUA’s membership serving a more middle-class, salaried clientele than the community-based ones.

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