The Vice President of Ghana, John Dramani Mahama on Wednesday, in Accra, urged financial and non-financial institutions committed to strengthening the private sector to help deepen the implementation of medium to long term investment reforms to improve on the country's competitiveness at the international level.
This, he believes, would help diversify the country's economy in order to adjust to the specter of lower commodity prices.
The Vice President made this call when he officially opened the ongoing two day leasing forum in Accra, under the theme -”Access to Finance: Enhancing leasing opportunities to promote private sector development”.
In helping to achieve this feat, His Excellency, John Dramani Mahama said government was ever ready to welcome contributions and proposals from financial and non-financial institutions, regulatory authorities, current and potential investors, and development partners on how the government could support and enhance the effective use of leasing and other financial products to strengthen the competitiveness of local industries.
He said, government would not hesitate to amend existing legislation or formulate new laws to regulate the sector in order to enhance the activities of local investors when the need arises.
Vice President Mahama told players in the private sector to be encouraged in discussing policy issues, benefits, challenges and opportunities associated with leasing as an alternative source of asset finance towards achieving a better country.
He said the initiative spearheaded by the Ghana Investment Promotion Council (GIPC), the International Finance Corporation (IFC) and the Ghana Association of Leasing Companies (GALCO) falls in line with the government's objective of attracting targeted investments at the domestic, regional and international levels to the country, to help boost the economy.
According to the Vice President, in-spite of the global challenges which have resulted in a deep impact on access to affordable credit in developed countries, Ghana continues to enjoy financial support from its donor organizations and, therefore, urged local entrepreneurs to take advantage of the opportunity provided them in order to boost their capital and efficiency levels in their operations.
He also called on players in the private sector to ensure sustainable development by continuing to upgrade on the country's infrastructure and also develop the markets in order to create a platform for investment.
He thanked the organizers of the programme and the Swiss government for her support in helping Ghana achieves its dreams.
The two day forum seeks to encourage informed dialogue that leads to consensus and provides input into public policy in the country and on how it can progress the opportunities the private sector needs to grow, create employment, attract and partner responsible international investment. It also seeks to share good international practice of how leasing has helped developed economies to deepen the range, products and opportunities of alternative sources of financing for the private sector.
The IFC Country Manager, Ms. Imoni Akpofure in a brief remark outlined her outfit's commitment to continue working with the GIPC, government, key regulators and the private sector in promoting leasing as an alternate source of financing for small and medium enterprises that face difficulty obtaining financing from the financial institutions.
The Chief Executive Officer of the GIPC, Mr. Robert Ahomka-Lindsey in his welcome address said the major problem confronting local enterprises in the country was easy access to funds; a situation which he said was having adverse effects on the performance of local industries.
According to him, the forum would explore issues such as potential new sources of leasing equipment, which sectors and industries stand to benefit most, policy issues and corporate strategies to help local investors.
The President of GALCO, Mr. Ernest Mintah in his address attributed the phenomenal growth the leasing sector had chalked over the years to entrants of the various financial and non-financial institutions who had contributed in providing funds to local industries.
He however, appealed to government to give capital allowances to the various financial and non-financial institutions championing this course in order to encourage them in their operations.
The event, which would end today, brought together policy makers, industry leaders, leasing companies, small and medium enterprises, financiers and key regulators to discuss policy issues and opportunities associated with leasing.
It was attended by investors in seven key sectors of the country's economy, namely petroleum and mining services, tourism, infrastructure, agriculture and agri-business, information and communications technology, manufacturing and financial services.
Research conducted by the IFC has shown that the leasing industry in the country was rapidly expanding.
The number of leasing operators increased from seven in 2005 to fourteen in 2007. Bank lessors now dominate the leasing market and make up nine out of the total fourteen companies with leasing operations.
The portfolio of bank lessor increased from US$22million in 2006 to over US$ 71 million in 2007, an increase of 220 percent. Over the past five years, the total lease portfolio of banks has appreciated by more than 4700 percent. Banks now control over 65 percent of the total lease market as compared to just 20 percent in 2005.
The value of new leases in Ghana increased from nearly US$ 31.5 million in 2006 to over US$ 93 million in 2007 representing an increase of over 196 percent, while the number of new lease contracts signed increased form 536 in 2006 to 1,381 in 2007. Total market value of leasing increased from nearly US$ 51million to over US$ 107 million, representing an increase of about 109 percent during the same period.
However, a thorough analysis and observation of the market indicate that the demand of leasing in the country could even be higher. An estimate of the current market share size revealed that the current size of the leasing market is approximately US$ 185.5 million as compared to the actual lease market size of US$ 107 million. A forecast of the potential demand and size of the leasing market in the next couple of years estimate the size of the leasing market in 2009 at approximately US$ 300 million.