Leasing, an emerging industry in Ghana, on Wednesday received a major boost following government's decision to use the mechanism as an alternative to provide a lifeline of credit to small and medium scale industries to make them viable.
Vice President John Dramani Mahama said government was giving recognition to the leasing industry because it provided an "innovative platform" which local entrepreneurs could utilize to boost their capital and to invest in new sectors of the economy such as oil and gas.
"The objective of government is to further advance access to affordable and efficient financial products that support the development of a viable private sector," he said
"We believe that leasing is an option to deliver on the infrastructural and other platforms required for sustained economic growth of Ghana," the Vice President added.
He was speaking at the First Forum on Leasing underway at the La Palm Royal Hotel in Accra with the objective of devising the necessary legislative instruments that would make renting a sustainable business in Ghana.
Deliberation at the forum would also focus on developing appropriate financial principles that could serve as a basis for capital formation and economic development, particularly for the small and medium scale industries, using leasing as the platform.
Vice President Mahama was emphatic about the need for government to use the instrument to strengthen the competitiveness of local industries by pledging support for legislative actions that would make the industry become a major source of capital formation.
Affirming support for an industry which has seen a phenomenal increase in its market portfolio from 51.3 million US dollars in 2006 to 107 million US dollars in 2007, Vice President Mahama said its development would be beneficial to the country as a preferred destination for both local and international investors.
"Ghana must deepen and implement medium to long term investment reforms that can improve our international competitiveness, diversify our economies and help us adjust to the spectre of lower commodity prices," said the Vice President in his justification for what is expected to be a major industry in Ghana in the foreseeable future. Government's interest in the industry is not far-fetched as the sector has posted some impressive figures in recent times.
The banking industry alone increased its portfolio in that sector from 22 million US dollars in 2006 to 71 million US dollars in 2007, an increase of over 220 per cent.
Mr Ernest Mintah, President of the Ghana Association of Leasing Companies (GALCO), said the sector could even perform better if the necessary laws were passed to regulate the industry. He appealed to government to consider introducing rebate related policies such as "capital allowances" as a way of attracting more investors to the sector.
The Swiss Ambassador in Ghana, Mr. Nicholas Lang, asked government to work towards removing bottlenecks which were hindering the effectiveness of the industry through innovative programmes. He said the forum should work towards decentralization of the activities of leasing companies so that small companies in the districts could benefit from their services.
Both Mr. Robert Ahomka-Lindsay, Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC) and Madam Imoni Akpofure, Country Manager of the International Finance Corporation (IFC), expressed delight that the sector could serve as a medium for generating employment and reducing poverty by means of enhancing the effectiveness of the private sector.
The development of the leasing industry, which is being spearheaded by the GIPC, the IFC and a Swiss Government agency, the State Secretariat for Economic Affairs, is premised on the fact that when properly developed, the sector could generate more than 300 million US dollars in 2009 alone.