Collapse of microfinance companies: over $5.4 million worth of claims paid

The Receiver of the 347 collapsed microfinance companies, Eric Nana Nipah, has said that he has paid close to about Gh₵30 million ($5,484,059.40) worth of claims to affected depositors.

Receiver, Eric Nana Nipah

Mr Nipah said that he has received close to 152,000 depositor claims worth about GH₵1.4 billion ($2,083,942,572).

He has so far validated about 80,000 of the claims which amount to about GH₵600 million.

In May 2019, the BoG revoked the licenses of 347 insolvent microfinance companies.

The Central Bank explained that the revocation of the licences of these institutions was to remove insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits from the sector.

Mr Nipah was subsequently appointed a receiver of the collapsed companies.

Cap on payment

Subsequently, some depositors claimed that they were paid only GH₵10,000 of their total claims. But Mr Nipah explained that they decided to cap the amount to be paid due to findings from a preliminary assessment of the situation of the collapsed finance institutions.

“We’ve noted a considerable amount of under reporting and therefore the integrity of the financial statements that we’ve come across raise a number of issues. A lot of the deposits were under reported for obvious reasons.”

“Based on a preliminary assessment of what we were seeing on the ground, what we decided to do in ensuring a balance between timeliness and effectiveness of payment and ensuring scrutiny and accuracy of validation, we decided that we would put in a cap of GH₵10,000 and make payment of claims up to GH₵10,000 than to rush to pay-out and short change some legitimate claimants,” he said in an interview on Accra-based Citi FM.

No guarantee of 100% payment

Mr Nipah further indicated that he could not assure that affected depositors and creditors of a 100% payment of their claims.

“Where we are now, is that we’ve taken control of a lot of these assets and we are getting ready to sell them so that we extract value out of them and pay the creditors. It will be a tall order to categorically confirm that every creditor or depositor will receive a 100 percent payment.”

“We are where we are today because the company is insolvent to start with and if the company is insolvent, it means that the liabilities of the company exceeds the assets of the company. So, it clearly shows that it’s not likely to happen and therefore, I’m not assuring the depositor base and by extension, the creditors that over and above what government has voted, they are going to receive a 100 percent when it comes to asset realisation. No, I’m not giving that assurance or guarantee,” he stressed.

20 companies to settle depositors

Mr Nipah added that even though the government had provided about GH₵900 million to be paid to depositors, 20 of the collapsed institutions have decided to make a 100% payment to all their creditors including depositors.

“We have been engaging with them, and if we look at the number of depositors that we are looking at in this segment, it is close to 6000 in number and the value of these deposits, those that have been received are in excess of a GH100 million.”

“This subset relates to operators who have come out to say that they do not need government funds to settle their depositor obligations that they are able to pay a 100 percent from their own resources. We’ve engaged with them and I’m satisfied that they have the means to pay a 100 percent of their total liabilities,” he added.

JOIN OUR PULSE COMMUNITY!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke