BoG To Support SMEs

By: Chris Twum and Maame Agyeiwaa Agyei
Dr. Abdul-Nashiru Issahaku
The Governor of the Bank of Ghana (BoG), Dr. Abdul-Nashiru Issahaku, has stated that he will compel major players in the financial sector to come up with policies that would make borrowing to Small and Medium Scale Enterprises (SMEs) much better, to support their businesses.

“How to reduce the cost of financing SMEs is by being transparent in the base rates, which are being created by the banking sector,” he said.

Dr. Issahaku was speaking at the opening of the maiden edition of the Small and Medium Scale Enterprises  (SME) Fair held in Accra, under the theme 'SME Financing in Ghana — Enhancing Access and Reducing Costs”, which was organised by the Ministry in charge of Private Sector Development and PPP.

The Governor continued that government borrowing rates in the local market should continue to decline, which, according to him, would increase the lending rates to SMEs in the country.

Dr. Issahaku said the prospects of reducing the high interest rates in the banking sector in the country are high.

“Recently, there has been a lot of talk about the high interest rates. It is something that concerns all of us. Conversional, when we bring down the interest rates, inflation comes down, and also pulls down the interest rates,” he added.

Dr. Issahaku disclosed that BoG would inject US$100 million into the agric sector to reduce the high risk associated with agro business, which prevents banks from lending to players in the agro sector.

According to him, the funding would help reduce the high importation of food items into the country.

Continuing, the BoG Governor explained that “This is a policy called 'Ghana Agro Base Rich Sharing', which was borrowed from Nigeria, where the Central Bank lends to players in the agric sector.”

Dr. Issahaku said: “The new policy would ensure technical assistance, insurance, foreign exchange, reduction in poverty, increase in exports and also digital financing.”

The agro sector's contribution to the country's GDP has been declining drastically for some time now. The sector's contribution to the GDP in 2016 was 0.04 per cent.

The Chairman of the National Development Planning Commission (NDPC), Dr. Kwesi Botchwey, appealed to the youth to rise above the current challenges and create opportunities for themselves.

According to him, as stakeholders try to stabilise the micro economy, there would be challenges, but the youth should exercise restraint and shake off bemoaning and grumbling, to enable them rise above the challenges.

Speaking on behalf of President John Dramani Mahama, he said the idea of holding the SME Financing Fair was conceived at the highest level of government, which depicts its commitment towards transforming the economy and changing lives.

He indicated that SMEs represent 90% of all registered businesses, including micro, small and medium enterprises, which have been identified as the catalyst for the economic growth of the country, as the major source of income and employment.

Dr. Botchwey continued that SMEs and informal enterprises contribute over 60% of Ghana's GDP, and over 70% of total employment in low-income countries.

He also urged the youth to engage themselves more in small and medium enterprises to help curb youth unemployment.

He said: “The surest solution to youth unemployment is the engagement in SMEs.”

Dr. Botchwey assured the youth of Ghana that he had faith in them, and that they are endowed with creativity and innovation, saying, “Young ones of today are vested with a great deal of creativity and innovation.”