- The stimulus package is a good idea but it will have no effect because the amount is too small.
- Financial institutions have better models for assessing risk and they will determine who to give it to.
- It won’t be able to stop a lot of businesses from collapsing.
- People are not spending money and that has a multiplier effect.
Mr. Kenneth Thompson, the Chief Executive Officer of Dalex Finance has disclosed that the amount being disbursed by the National Board for Small Scale Industries (NBSSI) to aid businesses who have suffered as a result of the pandemic will be ineffective in sustaining them.
In appraising the NBSSI disbursements of the stimulus packages to qualified applicants as a buffer for their businesses, he iterated that, “it is a good idea but it will have no effect because I think the amount is too small.”
He explained that government should have worked with the private sector suggesting, “we have Microfinance companies, we have Rural banks, we have finance companies; they know the clients and they are the people that can distribute it.”
Narrating how the government could support the businesses more effectively to stay afloat in these times, the Dalex Finance boss suggested that the government should work more closely with the financial institutions because he believes “financial institutions have better models for assessing risk and they will determine who to give it to and the government can even leverage at that money and say fine may be we put in 75% and as financial institutions, you put in 25%. So, there’s an incentive for the financial institution to collect the money back.”
Considering the impact of the COVID-19 on businesses, Mr. Ken Thompson revealed that “Businesses are suffering because there’s been a collapse in demand and that collapse in demand has resulted that they have very little revenue.
“So once you give them these monies and it takes them for the next three months, what happens next…they will still collapse.”
It will be recalled that, the government instituted the stimulus package to alleviate the scourge of the pandemic on businesses with distribution undertaken via the National Board for Small Scale Industries (NBSSI).
The Executive Director of the NBSSI, Mrs. Kosi Yankeh-Ayeh had earlier indicated that in their disbursement of funds, some beneficiaries had complained about the insufficiency of the money, considering some MSMEs averagely receiving GHC500 to sustain their business.
“I remember one time, one person asking me ‘what am I going to do with GHC1, 000 or GHC500?’ But it’s very interesting that if you look at the demographics of the country and based on the districts or the region that was applying, there was actually a way or an amount of funds that they were looking for because of the requests, they needed either to support the materials… that is what really fit with the work that they had”.
To this, Mr. Thompson said, the amount given to these businesses will merely be a drop in the ocean and will be for consumption rather than business sustenance.
“I think that the money is too small, it’s not going to make much of a difference. It won’t be able to stop a lot of businesses from collapsing. Even as at now, a lot of businesses still haven’t received a penny.
“People are not spending money and that has a multiplier effect”.
