BoG moves to boost business growth
An economist, Dr John Gatsi, has lauded the Governor of the Bank of Ghana for his plans to pursue new policies that will boost the growth of local businesses and create employment.
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In his first interview since being named Bank of Ghana Governor early this month, Dr Abdul-Nashiru Issahaku revealed his plans to "start to think out of the box about propelling growth of local businesses and creating employment."
The new governor plans to sanitise the financial sector, especially micro finance institutions (MFIs), and enhance the regulator's transparency and capacity.
To boost growth, he intends to consider options to provide incentives to banks to offer credit to strategic sectors at reasonable rates.
In an interview with the Graphic Business in Accra, Dr Gatsi, who is also a lecturer at the University of Cape Coast, said the plan by the governor to make finance available to local businesses was imperative for the development of the informal sector. He added that it could also help mop up excess liquidity through savings for investment.
Development of microfinance industry
The development of the microfinance industry, he said, was key to grassroot businesses.
The microfinance industry is traditionally seen as a poverty reduction tool and an instrument to support economic development, but increasingly, it is also recognised as a valuable financial service and a good business opportunity at the “base of the pyramid.”
A significant number of MFIs across the world have demonstrated that it was possible to reach out to the poor and be profitable at the same time.
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Analysts have criticised the Bank of Ghana for pursuing an inflation targeting policy, which has not been successful in containing inflation and ensuring general price stability, but Dr Gatsi said the fundamentals of the productive capacity were weak.
“We have a weak fiscal management framework, which is undermining the monetary policy structure,” Dr Gatsi said.
Fiscal crises
For years, Ghana has been considered one of Africa's star economies, but the government has been hit by fiscal crisis and lower global commodity prices, which have hurt revenues in a country that exports gold, cocoa and oil.
Consumer inflation in the country, an exporter of gold, cocoa and oil, eased to 18.5 per cent in February from 19 per cent in January, but it remains above the government's upper target of 15.7 per cent.
At the same time, gross domestic product (GDP) growth has fallen from around 14 per cent in 2011, to 4.1 per cent last year, in part because of a global slump in commodity prices.
