VICE PRESIDENT John Dramani Mahama has assured Ghanaians of government's intention to increase access to affordable and efficient financial products so as to support the development of the private sector.
“Many of the businesses in Ghana are classified as small and medium scale. One of the key requirements for growth is access to affordable and responsive credit. Our government believes that leasing provides an alternative and appropriate financing mechanism for businesses in Ghana.”
According to Mr Mahama, who was the guest of honour at the 1st Ghana Leasing Forum organised Wednesday in Accra, the current global recession is already having a deep impact on access to affordable credit in developing countries, hence the need for Ghana to respond by exploring viable alternatives such as leasing to provide a lifeline of credit.
Leasing is an alternative finance mechanism for businesses and a source of capital investment for financing of fixed assets.
Vice President Mahama continued that: “A second key determinant for economic growth is a transparent, legal and regulatory regime. We welcome contributions and proposals from the banking and non-banking financial institutions, regulatory authorities, current and potential investors and also our development partners on how government can support and enhance the effective use of leasing and other financial products to strengthen the competitiveness of our local industries.
“This might include amendment to existing legislation or entirely new laws to regulate the sector.”
He added that the quest to expand sectors of the economy such as energy, agribusiness, mining and construction and lately the oil and gas sectors, require leasing as an option to deliver on the infrastructural and other platforms required for sustained economic growth in Ghana.
Nicolas Lang, Swiss Ambassador to Ghana, delivering an address, noted that although Ghana's leasing market and workable leasing law has been functional since 1993, the market's immature nature necessitated the sponsoring of the Ghana Leasing Programme by the Swiss government and the International Finance Corporation (IFC).
Under this programme, the two institutions have been able to achieve phenomenal growth in Ghana's leasing industry.
The value of new businesses increased from US$31.46 million in 2006 to cover over US$93 million in 2007. This represented a surge of over 196 percent while the number of new lease contracts signed also went up from 536 to 1,381 during the same period.
Ambassador Lang however mentioned the over-dominance in the leasing industry by the construction and mining sectors, the high percentage of vehicles being most leased equipment in Ghana (64 percent total equipment financed in 2007) and the over concentration of leases in the Greater Accra region as a few problems in the sector.
By Samuel Boadi