- imports get bigger slice of credit-pie
Despite calls to provide financial support for businesses in export trade, especially in the era of continental free trade, a report published by the Bank of Ghana shows exporters are receiving only a pittance from banks in terms of credit.
According to the Statistical Bulletin report, out of more than GH¢50billion that banks gave out as credit to various sectors of the economy as of November 2019, only GH¢344million went to export trade – representing just 0.6 percent of total credit. However, import trade on the other hand received five times more (GH¢1.9billion) than the support given export trade.
This made the sector the least supported, in terms of banks’ credit, in the economy – a major cause for worry considering the fact that the African Continental Free Trade Agreement (AfCFTA) will come into force mid-year, and exporters are expected to be the main drivers of this trade deal.
With Ghana as host of the secretariat for a trading bloc that is expected to create a US$3trillion market, it will be sad if businesses are not able to capitalise on this advantage primarily because banks are not ready to provide the needed financial support.
CEO of the Ghana Export Promotion Authority (GEPA), Afua Asabea Asare, recently emphasised the need for structural reforms to be implemented so that businesses can add value to products and drive industrialisation in order to make the AfCFTA dream a reality.
“Our growth performance as a country reinforces the need for structural transformation and the need to constantly enhance the value of our exports if we are to maximise the potential AfCFTA offers. Under certain given conditions, trade can promote industrialisation. However, trade-industrialisation is not automatic and requires intentional strategic interventions,” she said.
Country Director of the World Bank, Pierre Frank Laporte, also said the AfCFTA is one of the best things to ever happen on the continent; hence, all efforts must be put in to deepen trade within the region.
“Africa has an excellent opportunity, because today when we look at intra-country trade within Africa, I understand it is less than 25 percent. So yes, we may not be able to fight the big guns out there, but we can create opportunities for ourselves by promoting more trade within the sub-region; and I think having this free trade agreement in place is the best instrument and one of the best decisions that Africa has made in a long time,” he said during a visit to parliament last week.
Country Director of Invest In Africa, Clarence Nartey, has also stressed the need to boost capacities of Ghana’s SMEs in order to help them overcome their challenges, or else other countries in the region with strong and competitive SMEs will be the new trade agreement’s main beneficiaries.
“It is our surest path to higher value rungs on Global Value Chains. Let me be brutally honest: come June 2020, firms in globally competitive countries like South Africa, Rwanda, Ethiopia and Kenya with experience in Regional Value chains will seize the opportunity and march across Africa. It is important that local businesses start getting ourselves ready or risk being side-lined or swallowed-up,” he told journalist in Accra.