AGI to set up industrial development bank

The Association of Ghana Industries (AGI) is in the process to establish an industrial development bank to cater for the financial needs of the mostly small and medium enterprises (SMEs), which constitute about 70 percent of its membership, the President of AGI, Mr. James Asare-Adjei, has said.

Access to credit has consistently been listed as the number one challenge hindering the growth of businesses in the country, particularly those in the SME bracket, according to AGI business barometer reports.

Many credit institutions and banks have tagged SMEs as a high risky venture to invest and as a result of which have introduced rigorous processes and procedures to follow when giving out credit to such businesses, in places where funds are available.

This has become a major disincentive to several businesses that are mostly are unable to meet these stringent requirements. Even the few who qualify to access these credit facilities are asked to come up with ‘ridiculous guarantees’ while also being made to pay back at unbearable interest rates.

Mr. Asare-Adjei, addressing members of the AGI at the 17^th Regional Annual General Meeting of the AGI Ashanti and Brong Ahafo chapter, in Kumasi, said the Association is fully aware of the challenges confronting businesses and in particular SMEs in the country.

He listed that critical among these challenges has been the issue of unavailability and the high cost of credit, which has become a deterrent to many businesses.

It was in view of which this that he disclosed that the AGI has taken an initiative to apply to the Bank of Ghana for a license to establish and operate an industrial development bank, as part of efforts to address some of these challenges.

He said while the Association awaits response from the Central bank and go through the necessary processes, the AGI has gone a step further to set up an industrial support fund to offer some medium to long term financing at concessionary rates to businesses.

He said the Association is seeking to draw funds from other liked minded organizations and other government established funding institutions like the EDAIF, Venture Capital Fund among others to support the operations of the Fund.

Meanwhile he asked that government should show support to industries by committing some money to the Fund. He emphasized that the only way to develop the local economy is to ensure that SMEs are well resourced with the needed capital at all times to expand their operations.

Despite these developments, he appealed to financial institutions to support the growth of SMEs and other businesses in the country. He said considering the critical role of SMEs in the economy, it is important that they are offered the necessary financial support to grow these small businesses into African giants.

He therefore asked that financial institutions should be flexible in their requirements to allow SMEs to access credit without any impediments, and also develop products to meet their needs.