In a landmark collaboration aimed at bolstering the growth trajectory of Small and Medium-sized Enterprises (SMEs) in Ghana, the Development Bank Ghana (DBG) and Proxtera, a pioneering Singaporean fintech firm, have joined forces to introduce a groundbreaking digital loan platform.
This initiative, unveiled on the sidelines of the esteemed 3iAfrica Summit in Accra, is set to inject a substantial sum of US$100 million into the Ghanaian SME landscape, particularly benefiting enterprises operating in key sectors such as agriculture, manufacturing, Information and Communications Technology (ICT), and high-value industries.
The partnership represents a significant stride towards leveraging digital solutions to foster financial inclusivity and support the burgeoning SME sector in Ghana. Under the aegis of this collaboration, DBG will extend loans to eligible SMEs, facilitating their expansion and growth aspirations through streamlined digital processes provided by Proxtera.
Mr. Kwamina Duker, the Chief Executive Officer of DBG, underscored the transformative potential of this initiative during a media briefing following the formalization of the partnership. He emphasized that the fundamental premise driving DBG’s involvement in this venture lies in recognizing the imperative of embracing digitization in contemporary lending practices.
“This platform allows that process to be much quicker, and effective, and as a result of that, the risk premium of the interest rate being applied to SMEs, will over time come down. If today, it takes about three to six months to get a loan, with a huge amount of documentation, and we can cut that down to turnaround of literally a real time of 24- hours… then we can appreciate the benefits of digitalization.”
Mr. Kwamina Duker
Mr Duker stated that because no one bank could bridge the huge financing gap of SMEs, the bank was serving as a catalyst to de-risk the environment for other banks to also support SMEs with affordable loans for their operations, and to create jobs for the Ghanaian youth.
Mr Duker noted that the Bank had done so in the rubber sector, making other banks to gain the confidence to provide loans to companies in that sector, and initiated a similar step in the rice sector.
Mr Duker indicated that in the rice sector, for example, the Bank could reduce the financing bank by some 14 per cent, but by de-risking, producing the right results, showing the yields, it would crowd in the other banks, saying, “that’s the role of the development bank.”
Credit Engine for SMEs
Mr Saurav Bhattacharyya, CEO, Proxtera, stated that they would through their technological platform build a credit engine for SMEs to be evaluated quickly for the disbursement of loans. He stated that Ghana is the fourth country to benefit from their platform, which he expressed confident that would help solve the access of credit challenge of Ghanaian SMEs.
While DBG has traditionally employed conventional methods to assess creditworthiness and disburse loans through its wholesale and rural and community banking channels, the advent of the digital platform heralds a paradigm shift towards expeditious and simplified access to finance for SMEs.
Eligibility criteria for SMEs seeking to avail themselves of the digital loans mandate Ghanaian ownership and operational presence within the country, coupled with the submission of a robust and viable financial plan deemed bankable by DBG. This stipulation ensures that the loans are channeled towards indigenous enterprises poised to make tangible contributions to Ghana’s economic landscape, fostering local entrepreneurship and sustainable development.
The collaboration between DBG and Proxtera signifies a convergence of expertise and innovation aimed at catalyzing the growth trajectory of Ghanaian SMEs. Proxtera’s proficiency in leveraging digital platforms to facilitate cross-border trade and empower SMEs dovetails seamlessly with DBG’s commitment to fostering economic inclusivity and resilience.
The advent of digital lending platforms holds transformative potential for SMEs, offering a lifeline amidst the challenges posed by traditional financing mechanisms. By harnessing the power of technology to expedite loan disbursement processes and enhance accessibility, DBG and Proxtera are poised to usher in a new era of financial empowerment for Ghanaian SMEs, fostering innovation, job creation, and sustainable economic growth.
