The move being orchestrated by government through the Ministry of Trade and Industry (MoTI) together with the private sector aimed at implementing a policy framework that will promote the growth and development of businesses is long overdue.
The call for the implementation of such policy framework has been intensified during the Ghana Industrial Summit and Exhibition (GISE) 2019 organized by the Association of Ghana Industries (AGI), as a consortium of banks including Fidelity and Barclays, sought to educate the private sector on a suitable SME financing regime by local banks.
On the African continent, a number of countries have already implemented such policy framework to ensure the competitiveness of their respective indigenous businesses be able to compete with multinational counterparts by coming out with measures to cause the purchase of locally made goods whiles ensuring pricing quality.
Most importantly, a policy framework to safeguard the development of SMEs and harmonise the activities of all the players in sector had become much more relevant than ever due to the yet to be implemented Africa Continental Free Trade Area (AfCFTA) agreement which comes off in July 2020.
Implementing such a policy to ensure growth in the sector is however not a new agenda being introduced, as this falls in line with government’s ten points agenda for industrial transformation which lists development of SMEs as one of its core objectives.
Instructively, despite a report which depicts that banks are now firmly repositioned for SMEs financing, it is important that such a policy framework which is being considered for implementation hinges harder on adequate financing of the sector.
The Goldstreet Business believes that, the SME policy framework must drive home key specific interventions such as credit rating system as well as effective measures to de-risk the business ecosystem which will in turn protect the development of SMEs in the country.
In Ghana, SMEs form about 92 percent of all registered businesses. Adequate financing for SMEs by financial institutions is therefore seen as crucial in the sense that it is tied to the country’s industrialization agenda, implying that Ghana’s quest to industrialise cannot be achieved without adequately financing the SMEs sector.
Instructively, some people have argued that what business entities need in the business ecosystem may not necessarily be direct injection of funds alone, but most importantly access to expertise, effective policy guidelines and an environment that promotes the safety and growth of businesses. This is why we think that a formal policy is important for the sector.
In effect, financing the sector to be competitive in the areas of pricing and economies of scale has also become very critical than ever with the impending AfCFTA agreement.
Importantly, as banks are now best suited for working capital financing for SMEs, government and the various business groups must do their best to ensure the implementation of the policy and its outmost benefits.