Industry players are pushing for the adoption of innovative policies designed to provide Small and Medium Enterprises (SMEs) with dependable access to trade finance.
They contend that these initiatives will not only boost SMEs’ production capacities but also assist in curbing the rising import costs burdening African economies.
In an effort to foster economic growth and development, SMEs play a pivotal role in many African countries.
However, they often grapple with limited access to financial resources, hindering their potential for expansion and productivity.
Recognizing the significance of SMEs in driving economic progress, the Association of Ghana Industries (AGI) and other industry stakeholders are calling for the implementation of forward-thinking policies.
These policies according to the Greater Accra Regional Chairman of the Association of Ghana Industries, Tsonam Akpeloo should aim to address financing challenges faced by SMEs, which frequently struggle to secure loans and credit lines from traditional financial institutions.
By creating innovative mechanisms for SMEs to access trade finance, such as tailored financial products and supportive lending practices, these policies can enable SMEs to flourish, Mr. Akpeloo told Citi Business News.
He said it is “difficult for the banks to lend to SMEs which he said is understandable due to the risk associated” yet he noted that “there is the need to design a working policy to grow SMEs.”
Mr. Akpeloo noted that “a startup will be lucky to access a loan at 20% interest per annum when the cost of credit is way less in other African jurisdictions like Ethiopia, South Africa, and others”.
The AGI also added that there is a need to support local businesses to employ the large numbers of graduates being churned out of Ghanaian Universities annually.
These SME-supportive policy measures, if implemented, could have a broader positive impact by helping to reduce the growing import bills incurred by the Ghanaian economy.
As SMEs become more productive and competitive, they can contribute to import substitution, thereby decreasing the need for foreign products and conserving valuable foreign exchange reserves.