48937807 - wood letter of sme with hand writing definition

Banking Consultant, Nana Otuo Acheampong has called on Small-Medium Scale Enterprises (SMEs) to adopt the culture of keeping clean accounting reports, in order to ease access to credit facilities from banks. 

According to Mr. Acheampong, the banking sector is ever ready to offer credit facilities to SMEs to expand production. However, the problem has been that most of these SMEs do not have proper accounts to enable banks determine their profit and loss margins for assessment of their credit worthiness. 

“The banks need your account books to decide if you are creditworthy or not. Without it, it will be difficult to offer any meaningful credit support”, he said. 

He explained that the financial sector cleanup conducted by the Bank of Ghana, urged banks to increase their operational capital from 70 million to 400 million cedis. Due to this, most banks have the capacity to give out loans to businesses, however the challenge with SMEs has been their lack of cooperation in keeping good accounts. 

Speaking on the Prime Morning show, Mr. Acheampong charged SMEs to “put their houses in order” and invest in having proper account records to help them get access to credit. 

A report from the International Trade Center (2020) indicated that SMEs represent about 85% of businesses, largely within the private sector, and contribute about 70% of Ghana’s Gross Domestic Product (GDP). In terms of formal sector employment, they account for just over half of all full time employment, with the percentage likely to be much higher in the informal sector.

Given the percentage of the populace that is employed by the sector, many SMEs have blamed the government for not putting in place adequate structures for credit facilities. The complaints have been that, banks are often unwilling to give these businesses loans for reasons which to them (SME’s) are unreasonable. 

Mr. Acheampong, a banking and finance expert encouraged SME’s to follow due process to access the facilities and grow their businesses for the growth of Ghana.