SMEs in Ho are unattractive to lending institutions

Ho, Nov. 19, GNA - Small and Medium Enterprises (SMEs) rank among the least preferred for credit by lending institutions in Ho, Mr Ransford Kofi Kani, Volta Regional Coordinator of the National Board for Small Scale Industries (NBSSI), has said.

This is due to high default risks, high transactions costs of loan and lack of collateral and information asymmetry the institutions faced when dealing with SMEs.

Speaking at a seminar as part of the on-going Volta Trade and Investment Fair in Ho on Wednesday, he said the situation was seriously affecting small enterprises in the municipality and proposed the creation of a credit pool for SMEs.

He also advised operators of SMEs in Ho to enter into joint ownership arrangements to increase their economy of scale to qualify for bigger credits to expand their operations.

Mr Kani also urged managers of such enterprises to develop their management competence, technical skills and business objectives to grow their businesses and become attractive to lending institutions. He cited poor business performance, refusal to redeem debts, high interest rates, political interference and poor management of loan facility as some of the drawbacks on the development of the SME sector in the municipality. 19 Nov 09