Ken Ofori-Atta
BEGINNING NEXT year, government has indicated it will begin major interventions to boost private sector credit to support all segments of the business community in Ghana.
Finance Minister Ken Ofori Atta, who made this known in Parliament yesterday, said in 2019, government engaged many stakeholders with respect to access to credit for the private sector which saw experts going across the length and breadth of the country to meet with SMEs and artisans, proprietors and associations to get a better understanding of the challenges they faced in accessing credit, while the ministry also engaged the AGI, Banker’s Association, among others, prior to this year’s budget.
“Through evidence-based research and field engagements with over 40 business associations, credit needs of micro, small and medium enterprises in the country; government is ready to take advantage of the macro gains, and enhanced social cohesion through our social intervention initiatives to focus on private sector growth, home ownership and infrastructure development, including toll roads. To anchor such shift, will be the National Development Bank (NDB) and the Ghana Infrastructure Investment Fund (GIIF).”
Enterprise Credit Scheme
Noting that the private sector in Ghana borrowed at over 25%, while their competitors elsewhere borrowed at least that 5%, the Finance Minister said government was working with the banking community to launch a two billion Ghana Cedis credit and guarantee scheme in 2020.
This initiative will be structured to incentivise banks to lend to private sector at discounted lending rates. The scheme which will start in the first quarter of 2020 will be targeted at specific industries such as agri-business, manufacturing, hospitality and tourism and the tech-sector amongst others.
Micro businesses and household lending
He said government would also partner with Fintech companies, local banks and mobile money operators to deliver micro credit to Ghanaian businesses and individuals.
The intervention, expected to deliver quick loans on favourable terms using technology driven platforms to do credit assessment, is in line with Government’s digitization 78 agenda.
It offers an opportunity for MSMEs to apply for loans on their mobile phones with minimal human intervention. The initiative will go live by the first quarter of 2020.
Long Term Institutional Investors
Mr Ofori-Atta continued that to encourage the establishment of private equity, venture capital and mutual funds as well as improve the ecosystem for start-ups, the current application of VAT on management fees for these funds would be abolished since it discouraged institutional and angel investors, both local and foreign, from investing in such critical funds for private sector growth.
“This will improve the accumulation of long term funds in the economy to support growth and jobs.”
BY Samuel Boadi