John Kweku Asamoah
The National Investment Bank (NIB) has indicated that it will focus on development banking next year in order to help government to successfully implement its policies.
George Alfred Thompson, Deputy Managing Director of NIB, who disclosed this at a breakfast meeting for its customers on Friday in Accra, said NIB would also undertake commercial banking activities.
Touching on fears being expressed by some customers of the bank about the collapse of the financial institution, he said the bank would meet the GH¢400 million minimum capital requirement announced by the Central Bank soon.
He said though government owns 99 percent of NIB, the bank would not burden government with any request to help secure that amount.
“We have assured government that we are going to do this by ourselves to prove that we are topnotch.”
The meeting was intended to deepen the bank’s relationship with its customers.
Charles Mensah, Managing Partner at Trust Consult Limited, who was the resource person, in a presentation, advised Small and Medium-scale Enterprises (SMEs) and fairly large companies operating in the country not to go for loans to service their debts under the pretext of expanding.
According to him, many companies have folded lately due to such practice.
He also advised the participants not to go for short-term working capital to expand their businesses since the repayment could overstretch their companies.
“Going for a one-year overdraft for example is a mismatch. If you want to grow, look at the structure of funding.”
“As a business, your working capital should pay for your operating costs – bills, staff costs and everything else.”
Also, he gave funding options for purchase of assets or business property.
“Machinery and equipment are integral to many businesses but funding cash flow to buy them can be difficult. Asset finance options also allow you to obtain the equipment you need for growth using a variety of methods. These are leasing, hire purchase, as well as sale and leaseback.”
The managing partner also urged companies to introduce third parties so that new capital could be injected into their businesses for expansion.
“But if you are having a challenge in servicing your debt and you decide to bring in a third party that will not augur well for you. It should strictly be new money to expand and not to service debt.
“Growth through acquisition could be the fastest way to expand.”
By Samuel Boadi