GAB, BoG To Establish GH¢200m SME Fund

The Ghana Association of Bankers (GAB) has announced plans to collaborate with the Bank of Ghana (BoG) in setting up a GH¢200 million Small and Medium-scale Enterprises (SME) Equity Fund for the domestic market.

President of GAB, Simond Dornoo made this known in Accra last Friday at the 35^th Annual General Meeting (AGM) of the Association.

According to him, the mechanisms for the successful operation of the fund which seeks to develop the nation's SME sector were being developed.

He disclosed that BoG and the operators in the banking sector would equally contribute to the fund.

Commenting on the performance of the banking sector in 2014, Mr. Dornoo said that 'the year 2014 was a challenging year for the banking sector. Rising interest rates and the volatile state of the Ghana cedi during the period under review seriously affected the operations of operators in the country's banking industry.'

Despite the challenges, he said, the sector was able to make some significant gains.

Deputy Minister of Finance, Mona Helen K. Quartey, in a remark, said the 'SME Fund will help small, medium enterprises to develop or produce locally what is needed even for the larger aggregators who do the big exports.

'This is a great idea. I think an SME Fund will be very useful especially at this time when we are looking at a transformation agenda that speaks to export-led growth.'

BoG and GAB must source for a project development company so that only the very best projects come through and then of course the fund itself will do the financing. That way, we have low level of non-performing loans and so forth and the fund will be able to cater for more people.'

Sector Overview
Explaining further, Mrs. Quartey noted that the banking sector has become highly competitive with new banks springing up everyday.

'These banks, both local and foreign owned, are developing new and superior products and services to meet the increasing needs of customers.

According to her, 'There is a high growth in the number of universal banks (currently 28 and still growing) with over 750 branches in Ghana. In addition, there are about 140 Rural and Community Banks with about 711 branches and outlets, 500 licensed Microfinance businesses and 640 Credit unions.'

Constraints
'Given the country's current fiscal space constraint, there is a significant financing gap.

According to her, 'To help address the challenge, the financial sector needs to complement government's efforts in this direction.

'The financial services industry going forward has no option but to be more innovative, diversify their products, integrate markets and manage risks more efficiently.'

BY Melvin Tarlue