Small and Medium Enterprises (SMEs) in Ghana face a difficult lending environment after the Bank of Ghana (BoG) maintained its Monetary Policy Rate (MPR) at 29%, according to Hayford Mensah Ayerakwa, a development economist at the University of Ghana (UG).
Speaking on Asaase Radio’s Big Bulletin on Tuesday (26 March), Ayerakwa expressed concern that high lending rates, exceeding 33–34% due to commercial bank margins, would stifle SME growth.
“That is not very friendly to SMEs. Some multilateral organisations may be able to handle that, but for SMEs, that is very difficult,” he said.
However, Ayerakwa welcomed news of potential interventions focused on SME lending. “That becomes the window that SMEs can tap into and I expect that that opportunity should come as a lesser cost of credit, and that basically means that SMEs can tap into it and be able to improve on their production activities,” he said.
Ayerakwa emphasised the importance of supporting SMEs within the agricultural sector. “As a developing economy like ours,” he said,
“one of the key things we have always talked about is the agriculture sector, not because it is a sector that we have ready available raw materials for further processing but it’s like a platform of the economy.”
He argued that targeted investments in agricultural SMEs throughout the value chain would “guarantee sustainability, we can guarantee production and we can guarantee returns on investment.”
Ayerakwa believes the government should dedicate more resources to such initiatives, suggesting “I think we should be doing is a bit more targeted interventions at specific chains” to optimise agricultural production.
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