Mr. Frank Obeng, Head of Business Advisory Services at Ghana Export-Import Bank (GEXIM Bank), has called on Small and Medium-sized Enterprises (SMEs) to fulfill their loan obligations to enhance their ability to access trade finance to be competitive on the African continent.

According to the Head of Business Advisory Services at the GEXIM Bank, most SME businesses take loans, and they don’t pay and for that reason, the bonds have a high non-performing interest rate.

“The SMEs must learn to abide by the terms that they are given on a term sheet and make payments. If for any reason, SMEs are not able to make payments, such must be communicated to the financial institution, and the appropriate arrangements have to be made.”
Mr. Frank Obeng

Mr. Frank Obeng made this known at a dialogue on creating SME competitive advantage in the African Continental Free Trade Area (AfCFTA). The panelists identified non-compliance with loan obligations as a major challenge in accessing trade financing from financial institutions. The dialogue was organized by CUTS International with support from the Ghana National Chamber of Commerce and Industry (GNCCI) and Deutsche Gesellschaft Für Internationale Zusammenarbeit (GIZ).

Non-Compliance of Some SMEs

Mr Appiah Kusi Adomako, West African Regional Director at CUTS International, also bemoaned the non-compliance of some SMEs, which he said is making 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 Appiah Kusi Adomako

Dr Ernest Addison, the Governor of the Bank of Ghana (BOG), on his part, underscored the importance of SMEs in Ghana, noting that they are critical in employment generation and an important contributor to economic output. “They, therefore, have the potential in harnessing the opportunities offered by AfCFTA. I urge them to increase their production and expand trade with other African countries”.

Dr. Addison noted that the Central Bank is aware of the possible implications of the AfCFTA on the financial sector and would implement monetary policy measures to achieve price stability. The Governor, moreover, disclosed that the BOG would implement measures to promote and maintain financial stability and ensure a sound payment system for SMEs to thrive.

Dr. Addison tasked African central banks to ensure stable and resilient financial systems for their respective countries to manage internal and external shocks, saying, “This should engender financial stability, a prerequisite for stable macroeconomic growth”.