AGI calls for development-oriented financial institutions

Mr Seth Twum-Akwaboah, the Chief Executive Officer of the Association of Ghana Industries (AGI), has said the country needs development-focused financial institutions to provide access to financing for Small and Medium Enterprises (SMEs).

He expressed concern that sector specific banks such as Agricultural Development Bank (ADB) and National Investment Bank (NIB) have all gone commercial with the advent of the Universal Banking concept.

He said the current Bank of Ghana minimum threshold was pegged at GH¢400 million adding; “I do not see why such specialised banks should be mandated to meet a minimum requirement of GH¢400 million.”

Mr Twum-Akwaboah, at the African Partners Pool Business (APP) Forum, organised by Invest in Africa (IIA), said the bar could be lowered for such development-focused institutions to encourage them to provide such crucial financial intermediation role for SMEs.

The event was themed: “Finance - Critical Need to grow your Business, But How and Where Can You Access It?”

The APP Forum is an online business platform that connects international companies to validate local businesses.

He said in addressing SMEs challenges, it was also important to emphasise the role they play to improve their access to finance. “We can increase the number of banks to 50 or more, raise the minimum capital requirements of the banks, and government can reduce domestic borrowing to the barest minimum,” he added.

Mr Twum-Akwaboah said all those could lead to the availability of loanable funds to SMEs to support their businesses. He called on banks to understand the SME business and the SMEs too must understand the expectations and requirement of the banks.

He said associations and development partners such as AGI and Invest in Africa also had a role to play in building capacities of SMEs to improve their access to finance.

He said government competing with businesses for funds within the domestic market must be reduced in order to improve access to SME financing.

Mrs Emmaline Ofosu, the Credit Analyst of Ecobank, said SMEs needed to have the right book keeping records, good governance structures, and effective management systems among other things to guarantee them credit.

She said banks were interested in honest financial statements and not the ones cooked specifically to access loan facilities. Mr Ibrahim Aminu, the APP Manager, said the difficulties SMEs faced in accessing financing for their businesses engendered the forum, which was to create the awareness on those difficulties and provide solutions.

He urged SMEs to put in place good corporate governance structures so as to make it easier to convince financial institutions to lend to them.

Since the launch of the APP, which is a platform created to provide business linkages between small businesses and larger ones, 339 tenders at the value of 830 million dollars have been undertaken, with about 250 SMEs trained in entrepreneurship and managerial skills and competencies.