Ghana

During the past 10 years, the US, the UK and China have seen a rapid expansion of what has come to be called “alternative lending” – non-bank lenders using digital platforms to serve distinct niches such as consumers and SMEs, which have been ignored by conventional lenders. In these environments with rich data sets and developed capital markets, much of the funding for alternative credit has come from institutional or accredited investors who are treating these loans as a new asset class.

Ecobank Ghana has launched an initiative to offer Small and Medium Enterprises (SMEs) preferential support in products and services.

The initiative also serves as a platform for adding value to SMEs through information sharing, networking, capacity building and access to markets and finance.

The Managing Director of the bank, Samuel Ashitey-Adjei, noted that SMEs were the bedrock of all economies in the world - developed or developing.

Financial and insurance activities are expanding at roughly twice the pace of the overall economy and just 30 per cent of the population are formally banked, so industry leaders have good reason to be optimistic about the country’s financial services future.

SMEs are invaluable to any economy. They function as a strong catalyst for the economic growth and prosperity of developing and developed countries alike – as they are a major source of income and employment.For instance, here in Ghana, SMEs provide about 85% of employment in the manufacturing sector and were noted to contribute about 75% to the country’s GDP until the commencement of the country’s oil production.It is however unfortunate that SME’s are still enormously challenged by myriad factors and so are not able to perform as they should – with one of the main challenges being access to finance – which this piece attempts to examine.

Small- to medium-sized enterprises, or SMEs, are invaluable to any economy. They can help catalyse job creation, reduce poverty, provide basic goods and services, and generate the export and tax revenues that help societies develop.They can even help to provide infrastructure and facilities like water, roads and electricity, and to diversify the country’s economy, making societies more stable.Ghana’s economy has reaped many of these social and economic benefits from its high percentage of SMEs. Making up 92 percent of the country’s firms, they employ about 85 percent of the country’s manufacturing workers. Until 2011, the manufacturing sector, which is dominated by SMEs, had been contributing about 70 percent to Ghana’s GDP. (This figure then dropped to 49 percent, mainly thanks to the commercial natural gas and oil production that began in the first quarter of 2011.) With the exception of a few privatised state- owned enterprises or natural-resource monopolies, most of the large, successful firms in Ghana evolved from SMEs.

The West Africa Emerging Markets Growth Fund (WAEMGF) has announced a USD 5 million investment in Leasafric Ghana Limited a specialist non-bank financial institution that primarily providing finance and operating lease solutions to SMEs and leading companies in Ghana.

The UK through the Department for International Development (DFID) is working with Technoserve to support Ghanaian Micro and Small Enterprises (MSMEs) to grow and build competitive businesses. The two organizations through a program, dubbed: Enhancing Growth in New Enterprise (ENGINE) will help selected entrepreneurs to refine, improve and implement their business ideas out of which the very best would be chosen for more intensive support of funding, business services, help with access to finance and connections through business networks.