BoG bemoans lack of funds for SMEs
The Bank of Ghana (BoG) has expressed worry that the lack of support from the traditional banking sector for small and medium- scale enterprises (SME) is stagnating the growth of the sector.
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According to the Head of Banking Supervision at the BoG, Mr Raymond Amanfo, the rigid procedure for accessibility of funds from the commercial banks by SMEs has compelled many of them to opt for funds from microfinance institutions at high interest rates.
The director made the observations at the reopening of the refurbished National Investment Bank (NIB) at Tema Community One.
He indicated that while the SME sector might be the most difficult when it came to loan recovery, the reluctance of banks to do business with them could have dire consequences on the country’s industrialisation drive.
“The needs of SMEs are more served by banks as against microfinance institutions, hence the need for banks to nurture and grow them since they are the engine for growth”, Mr Amanfo said.
“Make sure you grow and nurture them, because by doing these, you improve the economy, improve the quality of life of your customers and also improve the fortune of your banks”, Mr Amanfo suggested.
The new branch
The branch, which was previously located at the Community One Market, has been relocated to the Tema Financial Hub within the meridian enclave owing to what management of the bank described as the old branch outliving its usefulness.
The new four-storey edifice with an expanded car parking space would provide full complement services in the area of investments, remittances, SME banking, among others.
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Book Keeping
He pointed out that whereas SMEs may have challenges with bookkeeping and account management, it was the duty of commercial banks to nurture them and teach them how to manage their finances to ensure the needed investments made into their business by the banks were not affected.
“If a country wants to industrialise and improve its manufacturing sector, the SMEs are the first contact ports, hence we expect the banks to nurture and grow them”, he stressed.
The SME sector microfinance assessment of credit goes through an easy process as against the rigid processes that existed at the banks, although loans from microfinance come at a high interest cost.
Mr Amanfo ,however, commended the NIB for setting up a dedicated unit for SME financing at the bank to deepen the financial inclusion of people in the sector.
He said that customer care is critical, hence the need for management of banks to ensure their service and delivery were excellent.
“Products must be tailored to meet the market expectations of SMEs and you must endeavour to distinguish yourselves as a leader in the sector by providing clients with specific needs”, MR Amanfo counselled.
Safety of IT
Mr Amanfo underscored the need for the bank to ensure that a continuous audit management system was in place to protect its systems from external threats.
He pointed out that cybercrime was on the increase, hence the need to take strong measures to protect the safety of its information technology (IT) environment.
“May I urge you to take very strong measures to protect the safety of your information technology environment by ensuring a continuous audit management system that would ensure that hackers find it difficult to enter into your system”, he advised.
NIB CEO
The Chief Executive Officer (CEO) of the NIB, Mr Ernest Mawuli Agbesi indicated that the NIB presently had a total of 43 network branches nationwide.
According to him, the bank, under its deposit mobilisation programme, had adopted a strategy to draw closer to its customers, “so they may not have to travel long distances before they can locate an NIB branch”.
Mr Agbesi said the NIB, which was established some 53 years ago to support the industrialisation of the country, had diversified its market target to the areas of agriculture and agri-business, manufacturing, infrastructure, construction, service sectors and SME sectors.
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“Our objective is to the growth of SMEs into giant institutions that can propel the country to greater heights”, he said.
He ,therefore, tasked SME operators in Tema, Ashaiman and its environs not to shy away from approaching the bank for support.
The Board Chairman of the NIB, Togbe Afede XVI, in a speech read on his behalf, emphasised that the expansion of the banks network of branches would generate social benefits by creating jobs, promoting greater financial inclusion as an important tool for supporting economic development and the improvement of living standards.
He noted that the financial service industry continued to witness significant competition with the scramble for customer deposits.
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Togbe Afede said with the banking sector showing positive outlook, growth and expansion, a lot of microfinance institutions have come to stay.
He urged the BoG to exercise its regulatory mandate over them so that their operations could be streamlined for proper monitoring, “as a way to increase confidence in the sector”, Togbe Afede stressed.