SMEs urged to brace for long-term funds
A team leader of Frontier Market Advisor, a business solution firm, Mr Dode Seidu, has advised small and medium scale enterprises (SMEs) in the country to properly position themselves to attract the needed funds to boost their businesses.
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He was of the view that there were funds available in the system to augment their business operations but noted that unless they opened up to outsiders who had the funds to partner them, the finance needed to keep them in business would continue to elude them.
“If you don’t open up in order to attract investors, you will continue to cry that there is no funding to help you to expand, but I think there are a number of avenues for financing,” Mr Seidu said at a day’s forum organised by the Federation of Association of Ghanaian Exporters (FAGE) in Accra.
He was speaking on the topic, “accessing long-term financing for the private sector.”
With support from the BUSAC Fund, FAGE sought to push for long-term financing as a sure way of sustaining the growth of SMEs in the country.
Mr Seidu advised SMEs to seek financial advice by engaging experts to shape their proposals to be attractive for long-term financing.
He took the participants through various sources of funding and what SMEs in the country could do in order to access such funds.
Short-term financing
He said in actual fact, there were a number of sources of funding, “but the only challenge is that almost all of them are offering short-term financing, which does not favour the SMEs.”
Mr Seidu said it was highly impossible for the SMEs to exist and compete favourably with their counterparts anywhere in the world, where special concessions were given to SMEs.
EXIM Bank
He said it was in that vein that he was advocating the speedy establishment of the Ghana EXIM Bank, which would have the capacity to offer lower interest rates to exporters and SMEs.
Mr Seidu, however, proposed that when established, appointment to management position should not be politicised, rather people should be engaged based on their competencies and purely on merit.
He, therefore, called for more advocacy among exporters and the private sector in general to get government to ensure that such a bank was brought to reality.
Mr Seidu said earlier, the Agricultural Development Bank, the Bank for Housing and Construction and the National Investment Bank were among other attempts to get financial institutions to be tailored towards the needs of the business sector but which were not feasible.
He explained that those institutions, including the Business Assistant Fund, Venture Capital Trust and EDAIF, could not function as expected because all were depending on government for funds.
Challenge of private sector
The Vice President of FAGE, Ms Marjorie Abdin, said the biggest constraint to members of FAGE and indeed, the private sector, was the absence of long-term financing and low interest rate.
She cited Japan as a country that had long-term financing with negative interest rate for its private sector and wondered why Ghana could not adopt such.
Ms Abdin said unfortunately, no attention had been paid to long-term financing and said as it stood; the golden age of business as touted by government would be a mirage.
The Deputy Fund Manager/Grants Manager of BUSAC Fund, Mr Zakaria Umar Sumaila, urged the group and other identifiable groups to engage in advocacy work to press home their needs.
During an open forum, participants appealed to the government not to wholly absorb EDAIF with the establishment of the Ghana EXIM Bank.
They said EDAIF remained relevant for the SMEs in terms of capacity building, technical training among others, which would be outside the purview of an EXIM Bank.
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