Mr. Kobby Andah, the Managing Director of Bank of Africa, Ghana, has called on the Government to assist banks to easily verify the credit worthiness of SME businesses. According to the MD, this can be achieved by creating more credit rating agencies to smoothen out information lopsidedness between SMEs and banks.

Mr Andah noted that improper record keeping by SMEs is hampering their access to credit facilities from the banks. He therefore, urged SMEs to keep proper and accurate records to enable them prove to banks that they are worthy to be considered for credit.

“Most SMEs face difficulties in raising adequate and affordable credit from banks due to their inability to meet credit prerequisites. And they end up borrowing mainly short-term and expensive funds which tend to limit their growth potential.”
Kobby Andah

The Managing Director, thus, urged the SMEs to capitalize on the digitalization agenda of government to minimize cash transactions.

Mr. Andah further raised concerns on the structure of SMEs in Ghana, where most are individually owned. He noted that decision making is concentrated on one person, making transparency and business succession weak and poor.

Mr. Andah further spoke on the need of enterprises to turn over their profits back into their businesses to increase their stake. He stated that banks are more likely to support businesses whose owners have a larger interest in the business.

Banks Must Help SMEs with Cheap Loans

Moreover, the MD opined that SMEs are Ghana’s economic powerhouse. So, he encouraged banks to aid SMEs upscale their enterprises into large corporate Institutions by providing advisory services. He also charged them to take critical look at the interest rates charged on loans.

He cited an example of how his bank, Bank of Africa designed a product specifically for SME businesses in its quest to promote and grow the SME sector.

Meanwhile, he revealed the Bank of Africa is currently granting loans in excess of GH¢250,000.00 without collaterals to SME businesses. He believes, such bold step by the bank would help grow the SMEs which will eventually grow the Ghanaian economy.

The role of the Government in Supporting SMEs

On the flip side, Mr. Andah applauded government for all the good initiatives it has rolled out to support the SME sector. He touched on the benefits of government’s initiatives such as: the establishment of the Ghana Enterprises Agency and the 67 Community Business Resources Centers.

He however noted, in most cases, these support schemes do not work as expected or are not sustainable because beneficiaries regard the funds as free money.

To curtail this usual occurrence, he advised the government to improve the criteria for the selection of beneficiaries. Also, he said the government must put in place monitoring agencies who would follow up on the post-support services.

In conclusion, Mr. Andah challenged the Ghana National Chamber of Commerce and Industry and other bodies of SMEs to organize and assign collaborators. He noted that collaborators will follow up, assist and monitor the progress of their members as far as setting up the right structure is concerned.

However, he also advised SMEs to work hard and put proper structures in place to stay ahead of competition, especially the influx of products from our neighboring countries.