The Governor of the Bank of Ghana (BoG), Dr. Henry Kofi Wampah, has hinged the stability of the Ghanaian cedi in the second quarter of this year on foreign inflows.
According to him, the issuance of the about $1 billion Eurobond next month, as well as the Ghana Cocoa Marketing Board (COCOBOD’s) syndicate loan on the market to raise $1.2 billion to fund cocoa purchases, would broadly stabilise the under-pressure cedi.
Since the beginning of this year, the cedi has fallen more than five per cent, due to the high demand for dollars to pay for imports.
The Central Bank Governor also attributed the challenges facing the dollar to increased repatriation by multinationals to meet dividend payments, and the surge in imports.
Dr. Wampah made these known at the launch of the Ghana Banking Survey 2013 Report.
PricewaterhouseCoopers publishes the Ghana Banking Survey report every year to provide a detailed analysis of the performance of the banking sector.
The 2013 report is on the theme: “Harnessing the SME (Small and Medium Enterprise) potential.”
Dr. Wampah, who launched the report, indicated that the report’s findings, with respect to poor risk management and weak governance structures, are also relevant to the sector.
According to him, the survey results showed that many more banks were focusing on the Micro Small and Medium Enterprises (MSME) sector, although challenges, with respect to unstructured governance and management, high default rates and financial opacity, continue to hinder their acceptability as bankable propositions.
Dr. Wampah added that the Bank of Ghana always encouraged banks and other financial intermediaries to lend to the SME sector, explaining: “Apart from direct intervention through on-lending schemes through banks in the past, the bank has encouraged access to credit for MSME, especially, those in the export trade, through reduced risk weighting of credit for the export sector in the capital adequacy computation of the bank.”
Touching on rural banks and non-bank financial institutions, he noted that they were born out of the need to provide intermediaries that focus on meeting the credit and banking needs of micro, small and medium-scale enterprises, including those in rural communities and deprived urban centres.
Dr. Wampah was quick to observe that the survey results had re-echoed some of the problems of MSMEs, which hinder their access to credit.
These, he mentioned, include poor governance practices, lack of risk management practices, poor record keeping, and fusion of business with personal ownership, among others.
“We share the view that these challenges need to be overcome. To do so, however, requires that banks have a change of attitude,” he said.
Dr. Wampah, therefore, encouraged the banks operating in the country to consider MSMEs as partners in development, and add innovations such as training and education of SME actors to the typical financing package.
Source: The Chronicle
