Governor commends credit to the banking sector and industry

Accra, Oct. 31, GNA - Dr Paul Acquah, Governor of the Bank of Ghana, on Tuesday commended efforts by two institutions, the Exim-Guaranty Company Ghana Limited and the Guarantee Fund for Private Investment in West Africa (GARI) for collaborating and underwriting credit facilities to enterprises.

The two institutions signed a memorandum of understanding two years ago to jointly guarantee loan requests from Ghanaian banks and share technical information on new developments in the credit guarantee and insurance business.

Dr Acquah who was speaking at a quarterly workshop organized by the two institutions and Merchant Bank Ghana to assess the performance of the credit underwriting to the banks and to chart the way forward said there were indications that the financial sector had fully absorbed the impact of the surge of inflation and exchange rate depreciation in 2000 and had rebuilt their capital adequacy levels and credit books. He said despite the impressive indicators and the fact that the quality of the asset portfolio was improving with non-performing assets ratio and interest rates on the decline, 93credit worthy borrowers still face relatively high financial costs, with less credit-worthy borrowers usually presumed to be small enterprises, borrowing at the upper end of the interest spread, or worst still, excluded.=94 Dr Acquah attributed this to great caution in the pricing of risk due to the past record of high default and loss in default experienced by the banking system.

He therefore commended the intervention of the partnering creditors saying 93it is in this context that I find the products of GARI and the specific role of EXIM Guaranty and credit guarantee scheme especially important, in the growth strategy that is driven by exports.=94 Dr Acquah observed that credit had been in favour of export and that for various structural reasons the market was still constricted and schemes such as that of the two institutions sought to fill the gap. He expressed the hope that government interventions such as the yet to be passed bills on lending and credit would go a long way to make it easy to access credit from the banks.

Mrs Felicity Acquah, Managing Director of Exim-guaranty said her company was able to jointly interchange information and staff training with GARI and considered approval for credit requests for up to seven million dollars per industry in Ghana.

She said the only problem in Ghana was that the operations had not reached a full sensitization level to confirm that every managerial or credit staff in the banks and other non-financial institutions could convincingly attest to the benefits of the two collaborators. 31 Oct. 06