THE establishment of strong state institutions capable of creating a conducive, friendly and attractive environment for doing business is an imperative if the private sector is to play the lead role in the development of the economy.
The Better Ghana agenda can be attained if new businesses are created and existing ones supported to expand to create employment and wealth to facilitate improvement in the living standards of the people.
The efforts to develop businesses to stimulate economic growth will yield the desired results if the country’s lending policies are reviewed.
Many businesses, including the large-scale ones, find it difficult to access credit from the banks because of the strict and cumbersome requirements.
Big-time businesses can, at least, provide collateral because of their asset base, but small and medium-scale entrepreneurs either find it difficult to meet the demand for collateral by the banks or they cannot meet the demands at all.
Since the banks also are in business to make profit, we must not expect them to lend at lower rates when the money market does not give room for lower interest rates.
President J.E.A. Mills, at the weekend, echoed the concerns of business operators in the country when he asked banks to review their lending policies to enable them to channel increased resources into the agricultural sector, which is the mainstay of the economy.
While interacting with a delegation from Zenith Bank Ghana Limited at the Castle last Friday, the President said banks needed to particularly lower their demand for large collateral, which farmers, many of whom are peasant and subsistence farmers, could not meet.
The campaign for a reduction in lending rates and other requirements by the banks has been going on for decades but it is as if the banks are not prepared to accept the change and the question is whether it is possible for the banks to respond to the dictates of businesses within the context in which the market operates.
When it comes to credit to agriculture, the cost of money is very high because of our over-dependence on rain, instead of irrigation, to facilitate all-year-round farming.
We think that the “buy-and-sell” business is thriving with support from the banks because the risk factor there is less than it is in the agricultural sector.
The Daily Graphic believes that the status quo will not help to stimulate the kind of economic growth we anticipate unless policies and regulations are put in place to facilitate improvement in the way of doing business in the country.
The collapse of banks and mortgage arrangements in the USA and the UK re-inforces the critical role of the state in the development of the country.
It is not the “business of the state to be in business”, but the state can use its sovereign might to leverage credit internally and from donors for on-lending at attractive rates to producers at all levels.
We dare say that appeals to the banks will not work the magic because at the end of the day, their managements must account to their boards of directors and shareholders for their stewardship.
The Daily Graphic believes we ought to think outside the box to find solutions to the challenges that confront producers in trying to access credit at reasonable and affordable rates.
The Daily Graphic, therefore, calls on the government to set aside money from the Consolidated Fund and seek help from our development partners that can be channelled through the banks as credit to industry and agriculture to stimulate productivity and wealth creation.
No comments:
Post a Comment