Dr Richmond Odartey Lamptey, a private equity and international business consultant, has urged commercial banks to establish impact investment funds to support Small and Medium Enterprises (SMEs).
According to Dr Richmond Odartey Lamptey, this is important because Ghana’s Domestic Debt Exchange Programme (DDEP) has affected the ability of commercial banks to provide financial support to businesses due to some losses incurred due to the DDEP.
Dr Lamptey noted that it has become important for commercial banks to explore innovative capital financing means, including impact investment funds to shore up liquidity to be better placed to resource SMEs which are the engine of economic growth.
Such funds, Dr Odartey Lamptey stated, came with investment capital, technical assistance for both banks and businesses and support for the achievement of both financial and developmental goals.
“You go to the bank nowadays as an SME and they tell you that we are sorry we cannot help you. Some even tell you that we are giving our money to importers.”
Dr Odartey Lamptey
It was against the background that Dr Lamptey, who is also an Entrepreneurship and Strategy Lecturer at the University of Greenwich, London, advised commercial banks to urgently establish impact investment units dedicated to SMES.
“There must be a paradigm shift in how commercial banks conduct financial intermediation – not just collect deposits and obtain the necessary returns. They should proactively set up impact investment funds, seek additional funding, and invest them to finance SMEs.”
Dr Odartey Lamptey
Channeling Capital to Developing Economies
Dr Lamptey noted that in recent years, developed economies, and multilateral and development finance institutions are channelling such capital to developing countries through commercial banks and other financial intermediaries to fund businesses including SMEs.
“This is a window of opportunity for commercial banks in Ghana to establish impact investment units and seek additional funds to ensure that SMEs are empowered to generate growth in the economy.”
Dr Odartey Lamptey
Dr Lamptey is confident that Ghana’s SME sector would be an engine of economic stability and sustainable growth should commercial banks explore utilising impact investment funds. He recommended that banks that access impact investment funds should consider areas of developmental needs of Ghana including agribusiness, health, education, and digital infrastructure development.
The reporting guidelines and involvement of the fund givers, Dr Lamptey said, would ensure that the monies are given to SMEs who need it and can sustain their business, creating employment and contributing to economic growth.
Mr Clifford Duke Mettle, Chairman, the International Chamber of Commerce-Ghana, on his part, also indicated that the DDEP had made some banks incur losses, resulting in the reduction of loans particularly to the SME sector.
“For 2022 alone, almost GHS6.1 billion loss was incurred by banks, and this is a serious problem to the balance sheet of banks post- DDEP, hence, the need to explore ways to restore commercial banks liquidity and ability to support SMEs.
“All the commercial banks should intentionally put impact investment funds in place because they have the advantage – the interest rate is lower, and help in the sustainability of businesses.”
Mr Clifford Duke Mettle
Mr Mettle noted that reliefs by the Bank of Ghana, the establishment of the GHS15 billion Financial Stability Fund and the Development Bank Ghana seeing the need to support commercial banks to shore up liquidity would be helpful going forward.
Impact investment makes commercial banks become more finance-oriented, have de-risking opportunities, and focus on a dual mission of financial returns and social and developmental impact.
Meanwhile, the funds, which are noted for yielding positive financial returns and developmental impacts, are being flown to developing countries to support the achievement of the United Nations (UN) Sustainable Development Goals and SMEs.
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