US envoy urges financial institutions to support entrepreneurs

Ashaiman, June 29, GNA - Ms Pamela E. Brigdewater, United States Ambassador to Ghana, on Wednesday called on commercial financial institutions to support micro entrepreneurs to enable them expand their enterprises and contribute effectively to the country's economic growth. She said the US Government through the United States Agency for International Development (USAID) in partnership with the Government and other donors had instituted measures to improve access to finance through the creation of a more supportive enabling environment. Ms Brigdewater made the call at the inauguration of the fourth branch of the Opportunity International-Sinapi Aba Savings and Loans Limited (OISASLL) at Ashaiman.

She was the first customer to open an account at the branch. The company commenced operations in Ghana in 2004, and has branches in Accra, Kumasi and Techiman while more branches would be opened in other towns this year.

The US Ambassador pointed out that the US Government; was working with financial institutions to increase their confidence in extending assistance to Ghanaian micro entrepreneurs, as well as providing technical assistance directly to the firms involved.

She said these were in agricultural input supply; production, marketing, and exporting to enable the "export supply chains" become more competitive outside the country and regional markets.

Ms Bridgewater noted that sustainable access to micro-finance would reduce poverty by generating income and improve all sectors of the economy.

She was optimistic that with OISASLL in operation, financial assistance would be more accessible to micro, small and medium scale entrepreneurs.

Mr Fredrick France, Head of Banking Supervision Department of the Bank of Ghana (BOG) called on Savings and Loans Companies to lower their interest rates to allow beneficiaries of their credit facilities to expand and improve on their living standards.

He asked financial institutions to endeavour to reduce the inefficiencies and related cost of operation to provide reduced interest rates and better services to their customers.

Mr France said BOG had observed with concern the relatively high monthly interest rates ranging from five to eight per cent and 60-96 per cent per annum being charged by some savings and loans companies, adding: "This is not in the interest of the economy."

He said to have better handling of risks arising from financial intermediation; BOG would soon introduce risks based supervision that would require the commitment of greater supervisory resources to reduce risks encountered by financial institutions.

Mr France said to control risks however, management of financial institutions should continuously assess their risk profile especially when expanding and venturing into new activities and put in place appropriate measures to mitigate their consequences.

This, he said, would prevent or deter malfeasance, the breach of law and promote good corporate governance adding; "Failure to observe these principles are likely to lead to the decline in reputation, trust and confidence."

Mr France said these required the need to develop a culture of vigilance and respect for internal controls and ensured that it permeated the entire organisation.

He said to ensure sustainability and viability of financial system in Ghana, BOG would make sure savings and loans companies as well as other financial institutions maintained adequate capital, adopt good credit, liquidity management practices and sound internal control measures.

Hajia Alima Mahama, Minister of Women and Children's Affairs, in a speech read on her behalf, said the Ministry had since 2002 disbursed over 70 billion cedis to various women groups and individuals including traders and agro-processing enterprises to support their income generating activities.

She called on the management of OISASLL to be gender sensitive and take into consideration the specific financial needs of both men and women without limiting access of loan to only selected groups in society.

Hajia Alima Mahama noted with concern numerous challenges faced by entrepreneurs such as lack of operating capital, managerial skills, required collateral for the process of loans and urged financial institutions to willingly support entrepreneurs through credit schemes. Mr Benjamin Montemayor, Chief Executive Officer of OISASLL, said mindful of the plight of small and medium scale entrepreneurs, the company would establish more branches in the country to enable them access loans without collateral.

He expressed gratitude to USAID that contributed two million dollars to OISASLL to commence operation.