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Business News of Wednesday, 7 September 2005

Source: GNA

Banks call for trust from industry

Accra, Sept. 7, GNA - The Association of Bankers (AOB) on Wednesday called for trust between industry and the financial sector to unlock the much-needed financial muscle to meet Ghana's accelerated development goal.

Mr Albert Essien, President of AOB, said most of the people in industry and the manufacturing sector did not keep accounts books and there was no trust between the banks and the industrial sector. He was speaking at a joint meeting organized by the Ministry of Finance and Economic Planning, Bank of Ghana, Association of Ghana Industries (AGI) and the Ghana Union of Traders Association (GUTA). The meeting is the second Review Meeting on Financial Trends dubbed "Development Dialogue Series" with leaders of industry.

Mr Essien noted that sometimes even the addresses offered by some companies seeking loans were found to be non-existent, adding: "When we check from the Registrar General's Department, it is the same address they have and before you sort this out, it is often too late." Mr Essien was responding to claims that the banks and the financial sector were painfully slow at advancing credit facilities to industry, especially small medium enterprises.

He explained that fixed assets such as buildings no longer served the purpose of collateral since they were fast becoming impossible to retrieve when defaulters failed to honour their obligations. Mr Essien said even though there was a general perception that interest rates were high, some companies had over the years built very good relationships with the banks. They were therefore able to raise loans at much reduced rates than those published.

Mr Essien noted that if the level of trust were low borrowers would obviously pay more on the credit they applied for.

Prince Kofi Kludjeson, President of the AGI, urged the government to adopt a more pragmatic approach to meet the needs of industry. "The credit reference bureau is good, but will take a long time to be actualised. We should find quicker and prudent ways of getting addresses, house numbers and identity cards in place and correctly too." Mr Charles Ansong, GUTA President, said banks should increase their support for industry since they played a critical role.

"We want the Government to adopt a pragmatic approach to dealing with issues of credit risk and financial support to the private sector. It is the only way by which this country's manufacturing and industrial sector will thrive."

Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning, said, "It is good discussions have begun among the stakeholders." He said government had achieved macroeconomic stability and would ensure that it was sustained for growth to be achieved. 07 Sept. 05