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26.08.2005 Business & Finance

Commercial banks asked to review attitude towards SMEs


Shama (W/R), Aug 26, GNA - Mr Joseph B. Aidoo, the Western Regional Minister, has said the conservative nature of commercial banks towards Small and Medium scale Enterprises (SMEs) could affect the growth of the nation.

He said the banks and other financial institutions must carefully study the capacity and mode of operation of SMEs to understand how they operate.

Mr Aidoo said this at Ghana's celebration of the International Year of Micro Credit at Shama on Thursday.

The celebration which, is being jointly organised by Credit Union Association (CUA) and the Ministry of Finance and Economic Planning is on the theme "Micro finance: A tool for job and wealth creation".

"The banks still remain in their conservative shells leaving the big potential market of the private sector as an easy prey to fraudsters" he said.

Mr Aidoo said when businesses thrive, the commercial banks are the first to benefit and called on them to respond positively to the needs of SMEs by reducing the banks' interest rates to conform to that of the Bank of Ghana.

Mr Aidoo expressed regret that over the past two years, all district assemblies in the country have been unable to utilise 1.6 per cent of the total micro credit facility of 60 million dollars from the World Bank.

He said the funds are meant for Community Based Rural Development Project (CBRDP) and therefore urged them to re-strategise to enable more people to benefit from the funds. Mr Peter Y. B. Kotobribja, Chairman of CUA, said the credit unions had made several Ghanaians self reliant, confident and business oriented.

He said there are 250 credit unions in the country with a total membership of 156,000.

As at 2004, the credit unions have mobilised 314 billion cedis through members' contributions and granted loans totalling 262 billion cedis with assets worth 348 billion cedis. He said the rapid growth of the credit unions means more Ghanaians could save and borrow without the fear of loosing their investments. ''The enforcement of professional standards, the use and operation of business plans and the building of a credit union training centre would be the focus of CUA in the coming years.'' Mrs Christy Banya, a representative of the United Nations Development Programme (UNDP), said micro finance is a valuable weapon against poverty, hunger and deprivation.

She said micro finance facilitates the inclusion of poor people in economic flows and support the growth of local markets, extends economic opportunities through job creation and ensures job creation. In a speech read for him, Prof George G. Baffour, a Deputy Minister of Finance and Economic Planning, said a study conducted in the micro sector revealed weak management and governance and lack of capacity as some of the challenges of the sector.

Others are inadequate institutions to support information systems and fragmentation of the financial sector.

He said to address the problems the government had introduced reforms aimed at exposing the relevant and technical assistance of SMEs to meet the needs of women in rural areas.

Prof Baffour said the government had also established the National Micro Finance Centre (NAMFIC) to see to the effective disbursement of funds.