…calls for smart capital investment
The Chief Executive Officer of Wear Ghana, Awura Abena Agyeman has urged the Finance Ministry to ensure that the yet-to-be-established Development Bank Ghana (DBG) provides credit to young entrepreneurs to help them grow their businesses.
According to her, the needs of Small Medium Enterprises (SMEs), which are mostly run by women and younger entrepreneurs, are typically financing, though other types of SMEs might have other needs. Explaining further, she said her few years of experience as an entrepreneur has given her exposure to how necessary it is to have money to push the growth of business and also keep it running.
“Seven years of business experience has made it known to me that we need money to finance the type of investment, buy assets to manage the business and the new Development Bank should also look towards we the young entrepreneurs,” she stated.
She made these comments during the second edition of the Development Finance Series at the Research and Consultancy Centre at the University of Professional Studies (UPSA), held in partnership with Citi TV.
In Ghana, the SME sector constitutes about 92 percent of all registered businesses, employs about 85 percent of the manufacturing workforce and contributes to about 70 percent of Ghana’s Gross Domestic Product (GDP). This shows the important role they play to attainment of the country’s socio-economic development. The sector holds the key to accelerating the nation’s job creation, wealth generation and improvement in quality-of-life agenda, yet struggles with financial support.
SMEs have limited access to market, appropriate technology and information on available techniques. High cost of facility rental and purchase, land regulatory constraints among others are some of the problems of SMEs. Though there have been several efforts by the government to provide financial support for SMEs, problem with financing continues to remain a key challenge to the sector.
Miss Agyeman, in her remarks, hinted that there are some top SMEs receiving financing whiles others are not getting it. Giving some advice, she said the DBG should have a proper retooling done, make checks as to whether or not the banks understand the conditions attached to the loans and have the technical expertise on board as well.
Meanwhile, Dr. Emmanuel Debrah, a finance lecturer at UPSA, in his contribution, said all development banks have collapsed due to poor corporate governance and wondered what different the government will do to ensure the success of the new bank.
“When I heard of the Development Bank, what came to mind was all the development banks Nkrumah built. All of them are no more. The question is what have we learnt from there to guide the sustainability of the yet to be operational Development Bank, Ghana…Research has shown that all development banks in the past collapsed due to poor corporate governance,” Dr. Debrah noted.
But in a response on the same platform, Director of the Financial Sector Division of the Ministry of Finance, Sampson Akligoh, assured that the Government is plugging all loopholes to ensure the Development Bank Ghana becomes a success.
He added that the diversity of the partners working with the government to establish the bank is a testament to its sustainability “Typically, the way the bank was set up under the Companies Act gives us some level of immunity so in that case, we don’t have direct political involvement. Secondly, we have done all that we can to make sure that recruitment is done through an independent process,” Mr. Akligoh said.
The Government of Ghana in partnership with the European Investment Bank, and other international development institutions have committed to the establishment of a new development finance institution – Development Bank Ghana – to provide patient capital for Ghana’s industrialisation agenda.