HFC Boafo Microfinance rescues active poor

HFC Boafo Microfinance Service Limited is hopeful of becoming a fully-fletched savings and loans company in the next five years, whereby it can meet the credit demand of over estimated 50,000 people - covering those in rural areas and the active poor - and help to maximise their options in pursuit of shelter, business, education and other opportunities.

Ghana’s microfinance industry has made very significant progress with regard to the reduction of poverty and empowering women - two of the UN’s Millennium Development Goals. Presently, the biggest proportion of loan funds available from the industry goes to market women, besides many others belonging to one association or another.

Undoubtedly, the economic emphasis in the country seems to be shifting away from the restrictive poverty eradication agenda and is now angled towards generating domestic economic growth by - among other measures - making it easier for the informal sector to have access to finance.

There is still a large part of the potential microfinance market that remains untapped, especially in the rural and peri-urban areas. Most of the microfinance operators are realising this - and are planning to expand their branch networks out from the big cities where the market is approaching saturation, with some of the banks also setting up special-purpose subsidiaries to compete in the microfinance and credit sector.

Already, institutions like HFC Boafo microfinance are making efforts to further spread their operations to anywhere they can find an attractive concentration of the informal sector.

Since it commenced operations in April, 2007, HFC’s Boafo Microfinance has grown to include a loan portfolio worth nearly US$3.0 million and a client base of more than 5,000 active borrowers.

Boafo, which means "helper" in the native Twi language, combines Ghana's largest mortgage lender HFC Boafo with CHF to provide a “helping hand” to low- and moderate-income Ghanaians in their pursuit of business, shelter and educational opportunities.

It is estimated that in Ghana, 1.9 million urban poor face limited access to credit to improve or build their homes or expand their small-scale enterprises.

In its role as a unique supplier of non-mortgage housing microfinance loans, HFC Boafo:
• Lends for the improvement or expansion of homes in informal settlements
• Lends for business expansion to improve household incomes
• Requires less collateral coverage for loans to informal sector entrepreneurs than that required by other lenders
• Offers access to savings services through the HFC Bank
• Offers consumer education on managing credit and home improvement projects

Dr. Joseph Kimos Adjei, Managing Director of HFC Boafo Microfinanace Services, expressing his optimism told B&FT its business portfolio volume could increase from the current 5,000 loan clients and more than 8,000 depositors. It expects to grow its portfolio to between eight and ten million by close of 2010, disbursing three million Ghana cedis per month.

Dr. Adjei explained that HFC Boafo derives its strength from its joint venture partners by combining international best practice in micro-finance through the support of CHF International with availability of funding support from HFC Bank, as well as the comfort of doing business in the Bank’s extensive branch network.

“The relationship with HFC Boafo exposes our clients to commercial banking operations, which is very important when they require larger loan amounts or overdraft facilities in the future.

“Customers of HFC Boafo can easily graduate to be customers of HFC Bank and benefit from their products and services without necessarily being required to build their credit record with the Bank.”

HFC Boafo operates from some selected HFC Bank branches where it has large concentration of micro and small-size businesses. Currently, it operates from the following branches of HFC Bank: Tudu, South Industrial Area at Agbobloshie, Adabraka, Batsoona and Post Office Square, all in Accra, as well as Tema, Ashaiman, Koforidua, Techiman, Adum and Tarkwa Maakro, (Suame-Kumasi) Takoradi, Kasoa and Agona Swedru.

HFC Boafo microfinance has been positioned to provide a unique opportunity for low and moderate income Ghanaian households to achieve some level of comfort. Its diverse products have been packaged to help this group of people achieve their dream of owning decent shelter, growing their business and aiding their educational pursuits.

HFC Boafo currently provides five core loan products to its clientele: Busy Bee for micro and small-sized enterprise development; HI-5 for home improvement in five areas; land purchase, structure construction, roofing, fittings and finishing. Its Boafo Express loans also advances loans to groups to augment working capital.

It also provides cash collection services, ‘Susu Collection’, to its clients - especially market women who cannot leave their goods behind and go to the Bank to transact business.

HFC Boafo has also entered into a tripartite agreement with the Social Security and National Insurance Trust (SSNIT) informal sector fund and the HFC Bank Ltd, to help offer working capital loans to contributors to the fund to help expand their businesses.

The pilot scheme under the agreement has already commenced in Accra and Koforidua and will be rolled-out in branches upon successful completion of the pilot phase.