Bank of Ghana to establish Enterprise Credit Scheme to support Small and Medium Enterprises

This is part of efforts to ensure that SMEs have an easier access to credit facility, particularly in the agricultural value chain.

A major challenge SMEs face in Ghana is access to credit.

The Second Deputy Governor of the Bank of Ghana, Elsie Addo Awadzi, said this at the launch of a program, spearheaded by the Ghana Incentive-based Risk System for Agricultural Lending (GIRSAL) with assistance from the National Banking College.

She admitted that the financial perception of agric being a high risk venture has caused banks and other financial institutions to adopt strategic mechanisms to change the narrative.

Second-Deputy-Governor-of-the-Bank-of-Ghana-Elsie-Awadzi Pulse Ghana

“Data available to the Bank of Ghana indicates that as of January 2019, the agric sector’s contribution to non-performing loans in the banking sector stood at 9.44 percent. 22 percent of loans to the agric sector also stood at non-performing. This is quite high. This feeds into the perception that lending to the sector is very risky. But we must not be deterred by these numbers. There is a lot that can be done to recover these loans because access to credit remains a critical factor for sustainable growth in the agric sector in Ghana” she noted.

She said that the BoG has earmarked about GHC2 billion to be used for the implementation of the Enterprise Credit Scheme initiative, which will be accumulated from a 2% of the primary reserve kept by the banks.

“The Bank of Ghana has decided to set up an enterprise credit scheme by March. This is a scheme that will be funded by a 2.0 percentage of the primary reserve that is kept by the banks. At our current estimate, there is a pool of about GHS 2 billion that will be available to enable the banks to tap into, to allow the banks to lend to SMEs which will include agricultural businesses. We are working on modalities to ensure that this scheme is operationalized very soon.”

The program she spoke at was to train banks and other financial institutions with the practical knowledge to help them increase financial access to agriculture and agribusiness organizations.