Ghanaian Small and Medium-sized Enterprises (SMEs), have been asked to be loan compliant to enhance their ability to access trade finance to be competitive on the African continent.
At a dialogue on creating SME competitive advantage on the African Continental Free Trade Area (AfCFTA), panelists identified non-compliance with loan obligations as a major challenge in accessing trade financing from financial institutions.
The dialogue was organised in Accra by CUTS International with support from the Ghana National Chamber of Commerce and Industry (GNCCI) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
Mr Frank Obeng, Head of Business Advisory Services, Ghana Export-Import Bank, said, “Most businesses take the loan, and they don’t pay and for that reason, these bonds have a high non-performing interest rate.”
He added that: “The SMEs must learn to abide by the terms that they are given on a term sheet and make payments.”
“If, for any reason, payments are not able to make such must be communicated to the financial institution, the appropriate arrangements have been made,” Dr Obeng, advised.
Mr Appiah Kusi Adomako, West African Regional Director, CUTS International, also bemoaned the non-compliance of some SMEs, which he said made it difficult for banks to advance loans to them.
“Some SMEs take loans, and they do not want to pay and for that reason, the banks are not even willing to give. It’s sad that foreigners come here, and they succeed, and they make more profit at the end of the year.
“But if Ghanaian businesses were doing what is right, and they’re fulfilling their loan obligations, I’m sure that banks in Ghana would give more loans to Ghanaian businesses.” Mr Adomako said.
In a speech read on his behalf, Dr Ernest Addison, Governor, Bank of Ghana (BoG), said SMEs in Ghana were critical in employment generation and contributed significantly to economic output.
They therefore had the potential in harnessing the opportunities offered by AfCFTA and urged them to increase their production and expand trade to the other African countries.
Dr Addison said the central bank was aware of the possible implications of the AfCFTA on the financial sector and would implement monetary policy measures to achieve price stability.
The Governor said the BOG would implement measures to promote and maintain financial stability and ensure a sound payment system for SMEs to thrive.
He asked African central banks to ensure stable and resilient financial systems of their respective countries to manage internal and external shocks, saying: “This should engender financial stability, a prerequisite for stable macroeconomic growth.”