Some leading female executives and government appointees say the financial conditions are right for financial institutions to advance more credit to business women in the country.
The latest data from the Bank of Ghana shows that the three largest recipients of total credit or loans in Ghana, namely, commerce & finance, services and manufacturing sectors accounted for 56.9 percent of total credit in December 2018.
Commenting on the state of credit advancement in the banking sector, the Second Deputy Governor at Bank of Ghana, Elsie Addo Awadzi during her keynote address at the first ever female CEO’S and Business executives’ breakfast meeting organized by GLITZ Africa, charged financial institutions to increase the volume and value of credit they give out to business women in the country.
“I keep reminding the financial institutions about improving access to finance for women. Economic independence of women is really important and we need to do more to make sure that more women receive the credit they need to succeed with their businesses.”
The Chief of Staff, Madam Akosua Frema Opare outlined some of the areas that need to be reviewed when it comes to advancing credit to women in the Small and Medium sized Enterprises space.
“Seeing that a lot of women traders are in the informal sector, financial institutions need to create an enabling environment for such women. An area that can be looked at is interest rates for women in the SME space as a way of ensuring that they get access to finance to grow their businesses. Again the issue of banks demanding lands or landed property as collateral before giving credit to women business owners needs to be looked at.”
The Director of Tax Services at Pricewaterhouse Coopers (PwC), Ayesha Bedwei at the same female CEO’S and Business Executives’ breakfast meeting also highlighted the multiplier effect that can be achieved if more credit is extended to women in the SME space.
“To be able to expand and grow their business, having access to credit is very important. So for banks actively going out to give women businesses the opportunity to access loans for expansion is really critical.”
Credit Portfolio Analysis
The banking industry’s stock of gross loans and advances (both domestic and foreign) contracted by 12.0 percent in real terms to GH¢36.54 billion in December 20183 compared with the 4.2 percent contraction recorded in the same period last year.
Loans to the private sector (private enterprises and households) far outweighed loans to the public sector, accounting for 91.4 percent of the total stock of loans as at end-December 2018, with the remaining 8.6 percent going to the public sector.
Growth in private sector credit (excluding the loans under receivership) declined by 11.7 percent in December 2018, after recording a modest growth of 2.3 percent in December 2017. Banks’ credit stance on loans to households, however, continued to ease, resulting in a pickup in real growth of household credit to 28.6 percent in December 2018 from 11.7 percent in December 2017.
Household credit constituted 22.9 percent of the stock of total credit outstanding as at end-December 2018, while credit to private enterprises accounted for 66.3 percent. The share of indigenous private sector credit in total credit declined in favour of household credit between December 2017 and December 2018.
In terms of sectoral distribution, credit to commerce and finance accounted for the largest share (24 percent) of the industry’s outstanding credit as at end-December 2018. The services sector followed with a share of 21.5 percent of total credit.
By: Bobbie Osei/citibusinessnews.com/Ghana