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22.08.2004 Business & Finance

Gov't concerned about distribution of bank credit

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Kumasi, Aug. 22, GNA - Mr Yaw Osafo Marfo, Minister of Finance and Economic Planning has said the government was concerned about the lopsided distribution of bank credit in favour of non-agricultural financing.

He said the share of bank credit devoted to the agricultural sector and the rural economy was not commensurate with the levels needed to propel it to produce at the rate of socio-economic development the country needed and could potentially achieve.

Speaking at the inauguration of the Prempeh 11 Street branch of the Agricultural Development Bank, Mr Osafo Marfo said, a survey carried out by the Ghana Statistical Service showed that the Small and Medium Enterprises (SMEs) that employ up to 20 persons in their enterprises constituted 92.2 per cent of the industrial sector.

''As the government focused on the informal, small and medium scale enterprises, the expectations were that, the banks would as well extend their intermediation activities to those areas through increased lending to this sector.''

Mr Osafo Marfo appealed to the ADB to initiate lending policies to provide credit to this important sector of the economy.

He expressed the hope that the ADB would continue to be the strong partner of the government in the quest to make the agricultural sector the engine of socio-economic development in the country.

In a speech read on his behalf, Mr Emmanuel Asiedu-Mante, First Deputy Governor of the Bank of Ghana said, with the introduction of universal banking in Ghana, the minimum required capital for a new banking business as well as for existing banks converting to universal banking was now 70 billion cedis.

He said during the past year, two merchant banks were given approval to operate as universal banks, while a mortgage finance institution was also licensed as a universal bank.

''By the end of December, 2003, the banking industry comprised the Central Bank, 16 major banks, the ARB Apex Bank, 115 Rural and Community banks performing various aspects of banking.''

Mr Asiedu-Mante said two representative offices of Hong Kong and Shangai Banking Corporation (HSBC) and CitiBank regularised their operations in Ghana during the year and that seven major banks opened four branches, 17 agencies and two cash collection points.

Mr P.S.M. Koranteng, Chairman of ADB, said out of a total loan portfolio of 1.262 trillion cedis, Ashanti Region has nine per cent, which is 112 billion cedis of which 63.354 billion cedis was for financing agriculture in the region.

Mr Sampson Kwaku Boafo, Ashanti Regional Minister, appealed to the banks to support farmers and small-scale industrialists.

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