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Adopt urgent measures to
address credit needs of SMEs-Expert
Akosombo, March 26, Ghanadot/GNA – Dr. Nii
Moi Thompson, International Project Expert, Local Economic
Development International Labour Organisation, on Thursday
called for urgent measures to address the credit needs of local
businesses, especially the small and medium enterprises in the
country to stimulate growth.
He said unless the issue of affordable and accessible credit to
small and medium enterprises was addressed, economic growth
would always remain uneven and socially unequal and make the
quest for a higher income status an elusive one.
“Indeed, any stimulus package in 2009 that ignores the dynamics
and peculiar needs of local economies runs the risk of failure,”
Dr Thompson said in an address at the opening of a two-day
conference on Financing Local Economic Development in Ghana
organised by the ILO under its Ghana Decent Work Country
Programme.
The conference will discuss, among others, the broad
macroeconomic view from the Central Bank, the microfinance
sector, the challenges of financing local infrastructure and
credit to agriculture and rural women.
Dr Thompson said since SMEs make up as much as 70 percent of
businesses in the country, it was important to make their
funding needs the centre of public policy as the government
struggled to insulate the economy against the fallout from the
ongoing global financial and economic crisis.
He said experience had shown that given the appropriate support
to the SME sector, most of which are in the informal economy, it
could trigger employment and enhance the country’s economic
growth.
The informal sector accounts for as much as 80 percent of
employment in the country but contributes only 20 percent of
national income due to low productivity and several barriers to
growth, including a lack of accessible and affordable credit.
It is in this direction that ILO is working with government and
other social partners to establish an informal economy committee
to bring the special needs of the national economy to the centre
of public policy.
Citing results from the pilot project of Local Economic
Development Initiative in Ajumako-Enyan-Essiam and
Effutu-Awutu-Senya in the Central Region, Dr Thompson said the
outcome had shown that given the appropriate policy environment
the SMEs sector could play their role in national development.
During the project period the districts were able to establish
sub-committees on Production and Gainful Employment to provide
an institutional mechanism for promoting public-private
partnership in local economic development, the creation of
business associations and subsequent training of officials in
leadership management practice and advocacy, among others.
Dr Thompson said there were plans to expand the initiative to
six additional districts in the Central Region.
Dr Ernest Addison, Research Director at the Bank of Ghana, to
support government policy to alleviate poverty through
microfinance, the Central Bank had been creating the enabling
conditions aimed to promote micro financing as a strategy for
wealth creation and poverty reduction.
The Bank is also initiating reforms to remove distortions in the
financial market to allow for greater engagement of the Banks
and the Non-Bank Financial Institutions in SME lending.
Dr Addison said for effective sustainable financial sector, the
BoG needed to maintain a stable macroeconomic environment to
increase confidence in the financial system by working to reduce
the inflation rate to lower levels and to achieve a stable and
competitive exchange rate to reduce the uncertainties in the
financial market.
Besides, government must address the issue of inappropriate
institutional arrangements, poor regulatory environment and lack
of coordination and collaboration as well as poor linkages.
GNA |
