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20.10.2008 Business & Finance

Don't blame banks - Cal boss pleads with business operators

By The Statesman

The  Managing Director of Cal Bank, Frank Adu Jnr has described finance and availability of credit as a major "fox' that holds back business growth.

He is however urging entrepreneurs and business operators not to lay 'this fox' at the doorsteps of Banks.

He said Banks were always ready to assist businesses since they benefit directly and earn profits from their growth.

'It is therefore the interest of Banks that your businesses grow and not collapse', he said.

Frank Adu made this known when he gave a presentation on 'Little Foxes that hold back your business growth' at a strategic marketing conference organised by the Chartered Institute of Marketing, Ghana in Accra on Thursday.

'While lack of adequate finance and credit is indeed a major issue in business growth in Ghana, I submit that it is not the doing of the banks. We have to look at the issue critically', he stated. 

According to him, though banks sell money, they foremost look at risk and once the risk identified in a business proposal could be managed by a bank, it would be happy to lend money.

He said very often people thought that once a person approaches a bank for finance, it should be automatically given. Besides, people assume that banks have deep pockets.

 He regarded these notions as wrong and said gone were the days when most banks in the country were government funded.

'Banks are predominantly owned by you and I and the private sector which expects returns, profitability and dividends at the end of the year. Today, they are properly managed, in spite of the emerging troubles from the United States of America', he said.

He said banks operated on margin and not on absolute interest rates. 'It will surprise you to know that banks do not support a high interest rate regime since there is a positive correlation between high interest rates and the rates of default in loan repayments'.

 'Banks would therefore prefer a low interest rate regime at all times to protect their books.

I don"t think we have to apportion blame as to who is responsible for high interest rates; I should say that, high interest rates are not little foxes, but big foxes that hold back the growth of business'.

According to him studies have shown that for most products the middle income class would always buy more and urged Ghanaians not to fold their arms with the excuse that the Ghanaian market is limited and therefore businesses couldn't be grown to appreciable levels.

'If growth is essential for your business to survive, then you will have to find new markets for your products or create new products for the existing markets and new markets'.

He said the quantum leap necessary for businesses to grow from stage to stage required more than just visionary leadership but leadership which could get the workforce to commit to the vision.

Leadership that would motivate the workforce, get them committed to the vision and pull them together to achieve a common goal. This, he said has always been a challenge.

'When all these resources are available, that's, finance, appropriate technology, distribution, sales, marketing, you will still need people to manage them for good, hence the call for human resource development', he stressed.

For any budget holder, your human resource is your most valuable asset, and if you want them to make a significant difference, then you must finds ways of making them commit to the tasks assigned.

He said it had been a challenge now in Ghana to find committed staff and personnel to drive growth in line with the vision of the leader or founder of a business'.

He therefore urged business operator's managers and professionals to continue searching for the right balance to improve their businesses since they could not do it alone.

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