The Ghana Association of Savings and Loans Companies is urging government to come out with a policy that will protect its members in times of difficulties.

According to the Association, even though the Bank of Ghana regulates the financial sector, best practices in some African countries show that savings and loans companies are better protected from default in loan payment when there is a strong government fiscal policy in place backed by the regulator.

Speaking to Citi Business News on their expectations of the Mid-Year Budget Review, the Executive Secretary of the Association, Tweneboah Koduah Boakye, said the Finance Minister has already been notified by the Association to consider their recommendations.

“We are expecting that the government will come up with a revised policy. In any case there is no policy as far as we are aware for the SDI sector. The regulator is doing what they can do. But we are expecting the government to to come with a policy intervention to support the Savings anf Loans Companies so that they can continue to serve their clients. This is because the clients are the difficult ones and they are unable to pay their loans. Our balance sheets is made up of sixty to seventy percent loans that we have granted. So if the people are not able to pay, then it will also affect the whole industry,” he said.

Banks withstand COVID-19 shocks, SDIs hit hard – BoG Report

A recent report by the Bank of Ghana has established that even though banks have been resilient to shocks amidst the Covid-19 pandemic, the same cannot be said for Specialized Deposit-Taking Institutions such as Savings and Loans Companies and Microfinance firms.

The report, which was conducted by the central bank for the first quarter of this year, that’s from January to May, also showed that Ghana’s financial sector saw an increase in cash withdrawals largely due to the pandemic and its attendant impact.

The report showed that the robustness of the Specialized Deposit-Taking Institutions sector was negatively affected by the adverse impact from the COVID-19 spread. For instance, the Specialized Deposit-Taking Institutions sector showed constrained liquidity conditions and capital shortfalls.

The Finance Minister, Ken Ofori-Atta is scheduled to present the mid-year budget review to parliament on Thursday 23rd July, 2020.

He is expected to present the statement on the review of government projections for the 2020 financial year which will be backed by a request for supplementary estimates.

Government projections for the 2020 financial year have largely been affected by the economic implications of the Coronavirus pandemic.