Govt to source cheaper funds for SMEs
The government will source for cheaper funds for Small and Medium Enterprises (SMEs) as part of measures to provide financial leverage for the fragile SME sub-sector.
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Obtaining funds remains a big challenge for most SMEs in the country as most of them are not able to provide the requisite collateral for loans, while those who are able to do so get them at higher interest rates.
The Minister of State in Charge of Public Private Partnerships, Mr Rashid Pelpuo, who acknowledged this challenge at a budget tracking forum in Accra, said the government would be financially innovative in finding cheaper ways of getting money for SMEs.
Although he did not explain how this would be done, Mr Pelpuo agreed that it was unfair for SMEs to borrow from the same institutions as other large businesses, hence the need for them to “borrow at cheaper rates to expand their business”.
Meanwhile, the 2013 Budget Statement of Government hinted that it would revamp existing credit schemes alongside new schemes, such as the Youth Entrepreneurship Development Fund, to provide funds for start-ups and SMEs.
The minister, however, did not mince words in reiterating the relevance of SMEs to economic growth at a budget advocacy workshop for financial journalists in Accra.
The workshop was organised by the Institute of Financial and Economic Journalist (IFEJ) with support from Star Ghana, a multi-donor pooled grant, on the theme, “Tracking the Performance of the 2013 Budget Statement and Expectations for 2014.”
According to Mr Pelpuo, the growth of an economy is in question if it cannot create jobs for its people, hence the need for investment by both public and private workers, adding, “It is through investments that you can create jobs.”
A discussant at the forum, Mr Charles Bimpong, who is the Head of Research and projects at the Ghana Employers Association (GEA), also expressed concern about how industry players in the private sector who sourced for funds battled with high interest rates from lenders.
Despite several requests by these players for the government to intervene for them to borrow at competitive rates, actions were yet to be taken on it, he said.
Interestingly, it appeared the government itself was at a brick end as it required US$150 million to implement the first phase of the Private Sector Development Strategy II (PSDS) meant to create jobs for about 500,000 people, Bimpong pointed out.
Even though the funds had not been sourced, the government, again in the 2013 budget statement, pledged it would continue to pursue the implementation of the PSDS II to widen economic opportunities for the transformation of the Ghanaian economy and to develop a thriving private sector that creates jobs and enhances livelihoods for all.
By Jessica Acheampong / Graphic Business / Ghana
