A Financial Economist, Dr. Lord Mensah, has backed calls for government to channel the GHS600 million stimulus package meant to alleviate the plight of SMEs amid the impact of the COVID-19 pandemic through the banks.
He argues that disbursing the funds through financial institutions will enhance transparency and efficiency.
The National Board for Small Scale Industries (NBSSI) has already announced that it will deploy electronic portal to receive applications and disburse the GHS600 million fund.
The Chief Executive of Dalex Finance, Ken Thompson, has also kick against the move, stating that the funds can only be better disbursed by financial institutions.
Adding his voice to the call, Dr. Lord Mensah said the banks will be able to do a better job since they are already providing loans to Small and Medium scale Enterprises.
“One of the ways will be that the stimulus package can rather be channeled through the banks,” he said, adding that it will be a better move compared to the demands for banks to suspend interest payments on loans.
Dr. Mensah argued that it will be impracticable for the Bank of Ghana to compel banks to suspend interest payment since banks also pay interest on loans they acquire.
“If they stop loan service, obviously it’s going to have problems as far as banking system is concerned, because remember sourcing for funds is difficult for these banks in this country,” he stressed.
The demand for banks to suspend interest payment on loans was first made by the Ghana Union of Traders Association(GUTA) to help reduce the financial burden on their members due to the COVID-19 pandemic.
But describing the proposal as untenable, Dr. Mensah said “these are banks that are taking hard conditions from individuals around and from other businesses around, so if they should suspend loan service it’s going to affect them because they also have to service where they took the money from if you understand banking very well”.