SMEs HOLD KEY TO GROWTH (AUGUST 21, 2009)

IN a market economy, the private sector is always the driving force of economic activity, with the public sector providing the enabling environment to facilitate growth.
It was for this reason that the country embraced the market economic system in the early 1980s when it adopted the Structural Adjustment Programme, which gave birth to the massive privatisation of state-owned enterprises, which resulted in an appreciable injection of private capital into the economy.
The National Board for Small-Scale Industries (NBSSI), for example, has established Business Advisory Centres across the country to help private businesses to manage their operations better to yield higher returns. Indeed, such interventions have helped to boost the number of small- and medium-scale enterprises (SMEs) in the country.
According to an industrial survey by the Ghana Statistical Service (GSS), more than 80 per cent of all manufacturing concerns in Ghana are SMEs. Normally, this development should be good news for the country, but inadequate access to credit has inhibited their expansion.
SMEs have additional woes. They lack appropriate technology, and in most cases, packaging, which is usually the first point of attraction, is rather poor. They are also not able to meet orders in volumes and deliver on time.
It is against this backdrop that the DAILY GRAPHIC associates itself with the call by the Vice-President, Mr John Dramani Mahama, on banks and financial institutions in the country to increase credits to SMEs.
The Vice-President, who made the call when he inaugurated a new entrant, Access Bank, Ghana, into the banking scene, on Wednesday, said the SMEs had the productive energies to propel economic growth.
The Vice-President was making a statement of fact, as most advanced economies have made progress because of the productive activities of SMEs.
The entry of many banks, including the Access Bank, into the Ghanaian economy is good news because more money will be mobilised to support economic expansion.
It is the hope of the DAILY GRAPHIC that the ongoing recapitalisation of banks would inject fresh liquidity in their operations, which should compel them to reach out to smaller businesses as a necessary balance with financing huge transactions, some of which are long term in nature.
The DAILY GRAPHIC believes that the Bank of Ghana (BoG) has a leading role to play in making the commercial banks stretch their lending arms to the SME sector.
However, the central bank needs to be vigilant and conduct micro-stability supervision, to ensure that every individual financial institution is as healthy as the entire financial system.
We welcome all genuine partners, including Access Bank, who want to help us expand the economy to attain growth levels that will catapult the country into a middle-income status by 2020.