The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has charged leasing companies to come up with innovative ways to effectively reach out to small and medium enterprises (SMEs), which create sustainable livelihood for the majority of the Ghanaian population.
He said although there was a general agreement among experts and lay people that SMEs formed the bedrock of most African economies, the financial products that were targeted at supporting them were few.
“We had thought that the non-bank financial institutions, including leasing companies would fill this void by focusing their activities on this important but under-served segment of the financial service market”, he observed, adding that “unfortunately, most of these non-bank financial institutions also tend to behave in the same way as the banks do”.
Mr Baah-Wiredu made these remarks in a speech read on his behalf by Mr Paul Asimenu, Director of Legal Affairs at the Finance Ministry, at the 10th Convention of the African Leasing Association, which opened in Accra yesterday.
Leasing is a contract between two parties, where one party (the lessor) provides an asset (purchased from a supplier) for usage to another party (the lessee) for a specified period of time, in return for specified payments.
The African Leasing Association (Afrolease), which is a continental body of leasing practitioners and organisations with interest in leasing, links with governments and international agencies to promote the development of leasing as an alternative vital financing equipment, especially for SMEs.
Mr Baah-Wiredu said much as the government was disappointed in this state of affairs, it still nurses the hope that non-bank financial institutions would begin to play their right roles by targeting more services and products for the SMEs.
He said it was only through the provision of such services that leasing companies would be made true partners in the fight against poverty.
Mr Baah-Wiredu stated that it was because the government recognised developed capital and financial markets as vital for resources mobilisation for private sector development that it had for some time now been reviewing the existing legal framework, for the development of such markets to eliminate deficiencies in existing laws and where necessary promulgate new ones.
He said Parliament had already passed a number of laws, including the New Banking Act and the Long Term Saving Act adding that the existing Finance Lease Law and the Financial Institutions Non-Banking Law would no doubt benefit from this review in the near future.
The President of the association, Mr Juma Kisaame, called on all African governments to enact effective laws to create a conducive leasing environment on the continent.
Participants from 14 countries are participating in the six-day convention.