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Business News of Tuesday, 17 September 2019


Banks repositioned for SMEs financing - Dr Opoku-Afari

First Deputy Governor of BoG, Dr. Maxwel Opoku-Afari First Deputy Governor of BoG, Dr. Maxwel Opoku-Afari

The recent banking sector reforms have repositioned banks to adequately finance operations of Small and Medium-sized (SMEs), First Deputy Governor of BoG, Dr. Maxwel Opoku-Afari has asserted.

The latest banks credit conditions survey by the Bank of Ghana (BoG) indicates that there is net easing of credit stance by commercial banks on loans alongside increasing demand for loans by SMEs and households. What this implies is that commercial banks are beginning to ease their credit stance by opening up more to various households and small enterprises.

Instructively, the net effect of the banking sector reform implies that operators of small entities and individuals now have access to their funds to enable them effectively run their respective businesses. This also implies reviving existing jobs and creating additional jobs for the private sector.

The findings of the credit conditions survey is also evident in the recent SME Competitiveness outlook developed by the International Trade Centre (ITC) which indicates that despite the conventional wisdom in Ghana that banks are not providing much financing and investment to support operations of SME’s, in actual fact commercial banks are providing a high degree of investment relative to about two-fifths of the countries examined in the survey.

Speaking on supporting industrialization and export competitiveness on a sound financial ecosystem to drive growth of SMEs, Dr. Maxwel Opoku-Afari, said the recent banking sector reforms at some commercial banks and other deposit taking institutions, have created the capacity for SMEs to get more funding from banks; stressing that having a stronger banking sector implies a healthy business ecosystem.

This, he asserted during Ghana Industrial Summit and Exhibition (GISE) 2019 organised in Accra last week under the auspices of Association of Ghana Industries (AGI).

In Ghana, SMEs form about 92 percent of all registered businesses. Adequate financing for SMEs by financial institutions is therefore seen as crucial in the sense that it is tied to the country’s industrialization agenda, implying that Ghana’s quest to industrialise cannot be achieved without adequately financing the SMEs sector.

Financing the sector to be competitive in the areas of pricing and economies of scale has become critical due to the soon to be implemented Africa Continental Free Trade Area (AfCFTA) which is expected to kick off by July 2020.

Trade experts have argued that for SMEs in Ghana to remain competitive to rival the multinational companies with regards to the quality of products being produced, the sector must be adequately financed to enable SMEs explore opportunities in the agreement on the same footing as their larger and multinational counterparts.