GH¢2bn CARE Guarantee Scheme brings relief to SMEs, banks

Dr. Opoku-Afari, Deputy Governor of BoG

Government has officially unveiled the Ghana CARE Guarantee Scheme, a GH¢2 billion package to support businesses that have been affected by the COVID-19 pandemic.

The initiative, which falls under the GH¢100 billion Ghana CARES programme, provides guarantees for lending to SMEs that ultimately reduces the risk of lending for banks, as well as enhances the ability of these SMEs to access appropriate financing at relatively lower interest rates and longer tenors.

Speaking on behalf of the Finance Minister, Prof. Gyan-Baffour who is Minister for Planning, stated that the scheme will guarantee up to 80 percent of credit extended by participating banks to their clients. “This is to help SMEs undertake necessary adjustments to survive the impact of COVID-19,” he added.

Target sectors for the initiative include agribusiness, manufacturing, hospitality, and tourism, among other areas.

First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari noted that the policy intervention by government, like recent others, was necessitated by the devastating effects of the COVID-19 pandemic which hugely affected businesses in the country.

“The devastating effects of the pandemic have called for new ways of conducting business as well as expanding the frontiers of innovations to extract revenues from economic activity to help deal with unplanned COVID related expenditures which has come about as a result of disruptions in the economic activity from: border closures, a slowed down economy, and stressed domestic and international financial market etc.

A unique feature of the Ghana CARES program is that it is being done through the provision of guarantees rather than cash handouts and is less distortionary to both the financial system and beneficiaries own sustainability going forward.

It is my fervent belief that this guarantee scheme under the Ghana CARES programme would go a long way to reduce the risk perception of these SMEs, help reduce their cost of borrowing and increase their access to appropriate financing,” he said.

The programme, the Deputy Governor added, would also enable businesses to produce more to meet both local demands, as well as provide decent livelihoods to households that depend on them.

Dr. Opoku-Afari further urged qualified SMEs to take advantage of the timely policy intervention to help sustain and grow their businesses in support of the national effort to restore and place the economy on a path of faster growth and development post-COVID 19.

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