Policy coordination is critical to supporting sustainable SME finance

The deputy Governor of the Bank of Ghana, Elsie Addo Awadze, has revealed that policy coordination is critical to building an entire ecosystem for supporting sustainable SME finance.

According to her, a number of different stakeholder groups — both public and private would need to work together to develop smart policy interventions that would help to address existing weaknesses in the SME market to achieve a greater purpose. Besides that, she said there is a need for an effective regulatory policy that would help promote access to a variety of financial products and services suitable for SMEs.

“Malaysia promotes SME finance through a holistic and pragmatic enabling framework; this does not need to compromise on regulatory and supervisory standards. We need strong and resilient financial institutions to deliver SME finance on a sustainable basis”

Interacting with the media,She noted that Effective policies to promote SME finance would  need to be evidence-based, drawing on high quality statistics on SMEs,  business environments within which they operate, and how SMEs would be impacted by policy and regulatory measures.

Elsie Awadze noted that SMEs could play a  pivotal role in slashing the gender gap  based on the fact that  SMEs in most developing economies were  the bedrock of socio-economic development, contributing significantly to GDP, job creation and improved livelihoods. “In Ghana, SMEs form about 92 percent of all registered businesses”.

“As drivers of growth, SMEs have a unique role to play in promoting equal opportunities for women in formal employment through workplace policies that support women. This is not only ethical. It also makes business sense. There is enough evidence to show that women make significant contributions to the growth and competitiveness of businesses, in their roles as shareholders, board members, and employees”.

“The truth is, there are many women already playing key roles in SMEs in Ghana. There is the need to further support them to fully contribute to these businesses as they pave the way for other women to follow in their footsteps”.

“While financial sector regulators around the world have, and quite rightly so, focused largely on strengthening their regulatory frameworks to avert another such crisis, it is gratifying to note that regulation in much of the developing world has also made room for financial innovation and inclusion. When carefully designed, regulatory frameworks can promote financial stability on the one hand, while ensuring that businesses, households, and individuals at the bottom of the pyramid gain access to critical financial services and products through financial innovation”.

She said The Bank of Ghana has been at the forefront of promoting financial inclusion and innovation in Ghana. “One significant initiative has been the opening up of the electronic money space to non-banks and FinTech partnering banks. This has led to increased access to financial services and products for previously underserved groups”.

According to Mrs. Awadze, There are currently 24 million mobile money accounts in Ghana — about twice the number of bank accounts — accessing savings, investments, insurance and pension products and services using mobile money accounts. “Ghana’s automated collateral registry has also become a key part of the credit market infrastructure, supporting bank’s credit delivery to borrowers”.

“The Bank of Ghana will continue to promote financial inclusion by encouraging financial services providers to provide products and services suitable for SMEs, through sustainable credit practices and innovative payments services.”

By Adu Koranteng