The Opportunity

First Mutual Capital

The microfinance sector in Ghana is beginning to emerge as a viable, prosperous, and growing industry.


Of those living below the poverty line, the majority remain financially excluded, producing a massive potential demand for microfinance.


In spite of this, microfinance has been relatively slow to take hold in West Africa in comparison with East Africa, Latin America or Asia.


The sector in this region is now catching up rapidly. The combination of recently found political stability, market potential, entrance of international microfinance networks and increased experimentation in institutional products and services has started to attract the interest of commercial investors.


The sector in Ghana is evolving from an informal field of disjointed initiatives into an industry that has benefited from various reorganisations by the central banks, apex bodies and associations, thereby attracting investors, networks and technical service providers.


There is the on going drive to focus on Micro, Small, and Medium Enterprises (MSMEs); Most for-profit MFIs are now focusing on lending to SMEs and salaried employees. Their portfolios are mostly urban and average loan balances are above USD 1,000.

Commercial banks have also downscaled to focus on this MSME market, thus leaving the classical microfinance market with loan sizes less than USD 1,000 mostly underserved.


The microfinance sector in Ghana has also been adopting new products, methodologies and technology. MFIs are focusing on Management Information Systems (MIS) and mobile banking.


The product range of many MFIs has also grown in recent years, including innovations in savings, insurance and Islamic lending products. Microfinance lending methodology is another area that has seen a recent change.


Donor funding in Ghana is also on the decline. With donor funding waning and client deposits inadequate to fuel MFI growth plans, MFIs in Ghana seek access to commercial growth capital, especially debt.


Benchmarked against other countries, Ghana remains one of the most under-leveraged microfinance markets. Local commercial banks hesitate to extend loans citing their traditional focus on collateral based lending and competing demands for capital internally given their own downscaling plans.


International funding from institutional investors is also limited given the foreign exchange risk inherent in such transactions and the fact that most of them concentrate on the Tier 1 Mfi’s.

Structure of Microfinance Sector – Ghana


The chart below maps the structure of the microfinance sector in Ghana .

The microfinance sector

Our Approach

Identifying Growth

Identify growth businesses operating in our target markets. The process of identifying investment opportunities involves finding investments with high impact; economic, environmental, financial, social and technological impact, and a viable path to exit investments.

Prioritise Investments

Prioritise investments that provide significant opportunities to empower women given the strong correlation between women’s economic empowerment and poverty alleviation.

Taking Stakes

Take significant minority stakes in selected investment opportunities. Majority stakes may also be acquired depending on the value proposition.

Create Value

Create value by articulating and implementing a clear business strategy for the portfolio company, strengthening managerial decision making within the company, enhancing corporate governance and leveraging our resources to assist the company achieve its stated business objectives.

Monitor Progress

Monitor the progress of the portfolio company over the investment period and provide regular progress reports to our investment committee and investors.

Exit Strategy

Initiate predetermined exit strategies to ensure a timely return on invested capital while maximising returns.

First Mutual Fund
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