Mr. Kenneth K. Thompson, Chief Executive Officer (CEO) of Dalex Finance and Leasing Company Ltd., has stated that the current economic situation indicates the Government of Ghana, lacks the capacity to borrow.
According to Mr. Thompson, the private sector on the other hand, can lend and borrow. This, he disclosed, is feasible on grounds that the government provides agile data systems to ensure the validity of persons who accesses loan facilities from the various financial institutions.
“At the moment we need to borrow to fund development projects. But the government doesn’t have the capacity to borrow because it is broke. I said government is broke because it spent over 100 percent of the income it earns on salaries, wages, on interest and loans.”Mr. Kenneth K. Thompson
Dalex Finance’s CEO, touching briefly of loan disbursements, stated that his outfit, for instance, channels loan facilities to only government workers and not to the private sector.
“We [Dalex Finance] know them [Government workers] with IDs and it will be difficult for them to run away. But we don’t have enough data [on persons within the private sector].”Mr. Kenneth K. Thompson
Mr. Ken Thompson made this disclosure during the 2021 Ghana Economic Forum under the theme ‘Strengthening Home Grown Policies to Underpin the National Digitalization Drive and Shared Financial Prosperity’.
Private sector’s quest for data
Mr. Thompson revealed that one of the major reasons why financial institutions refrain from issuing loan (credit) facilities to private sector is the lack of available information (data) to verify borrower’s credit worthiness.
This, he disclosed, requires stakeholders’ contribution, especially the government, to step up efforts in providing a strong database that will address this identification issues.
Dalex Finance’s CEO suggested that government can ‘gear up’ its drive towards data provision by linking the Ghana card to individuals’ DVLA, VISA cards, and bank accounts and make such data systems readily accessible to financial institutions to help with their operations.
Mr. Thompson, highlighting the benefits Ghana’s economy stands to gain by embarking on such data provision, stated that, “the potential increased money that will come to the country will be about US$15billion, because the country’s consumer debt as to the proportion of GDP is 19 per cent”.
“So, assuming that, we know the people coming to borrow from us, we will be prepared. And borrowing to those Small and Medium Enterprises (SMEs) will increase the GDP to at least 20 per cent. And if our GDP is even about US$60 billion, 20 per cent of that will be US$12 billion and that’s a lot of money.”Mr. Kenneth K. Thompson
Also, Mr. Kenneth K. Thompson argued that, if government continues to empower the private sector, in the long run, the private sector will be better placed to contribute progressively to the development and growth of the country and create more job avenues.
Briefly describing how Ghana’s commercial courts handle cases, Mr. Thompson said “when you take a case to the court it takes forever; the speedy resolution of cases is very important to us. Get the courts to work for business to go on”.