The National Board for Small Scale Industries , NBSSI, has promised that soft loan disbursements to small and medium sized enterprises will commence shortly, expectedly from this month with the modalities already put in place.
To be sure, government’s decision to use the NBSSI to disburse state funding to alleviate the impact of the coronavirus outbreak, is a most commendable one. There were widespread fears that the loan funding would be used as a political weapon to win support for the incumbent government ahead of the general elections slated for the end of this year. While this is still possible, being that the NBSSI is a state institution, political interference will be at least minimized, compared with if the loans had been disbursed by a ministry. The decision to use NBSSI instead suggests good faith and transparency by government.
This is further evidenced by NBSSI’s decision to collaborate closely with recognized business groupings such as the Association of Ghana Industries in deciding who gets what.
However even as this newspaper applauds these decisions and the integrity behind them, we also call for the factors and considerations behind the selection of the eventual beneficiaries, to be made public. This would avert accusations of favouritism, political or otherwise, which are likely to arise at this time that many businesses are desperate for funding and would be sorely disappointed if they fail to secure part of the GHc600 million up for grabs.
Definitely, there will be lots of disappointed enterprises – GHc600 million is a small amount considering the quantum of genuine needs of the eligible beneficiaries which indeed is why this newspaper has called for increased funding of the soft loan aspect of the Coronavirus Alleviation Fund.
But no matter how the soft loans are disbursed, this initiative, in its current form still does not address the plight of micro-enterprises such as artisans, hairdressers, fitters and the likes who are too small to be members of the formal business groupings that will select the beneficiaries – but whose small size makes them the worst affected by the economic impacts of the COVID 19 outbreak.
There are arguments against making them beneficiaries. For one their contribution to overall economic productivity is very low. For another most such enterprises do not pay income tax and in the view of some this is enough to disqualify them from such state support.
However, they account for a large proportion of employment in Ghana and indeed comprise the most vunerable segment of the employed. Besides, even though many do not pay income tax they do pay consumption taxes, like everyone else.
This why we again call for an increase in economic impact alleviation spending. While we acknowledge the finite nature of resources available, we believe that failure to provide some sort of support to this category of enterprise would ultimately take a huge toll on the poorest segment of the citizenry.
Under the circumstances this calls for a separate alleviation initiative, perhaps supervised by the professional associations in the informal sector. It could be funded out of the US$500 million in savings to be made this year from the suspension of debt servicing of official bilateral debt.
We support the initiatives to support private enterprise while the coronavirus continues to wreak havoc. But those initiatives need to be all inclusive as well as transparent.