Seth Twum-Akwaboah, Chief Executive Officer of the Association of Ghana Industries (AGI)
The Association of Ghana Industries (AGI) has lamented the challenges they face in accessing loans facilities to expand their businesses.
According to the association, its members always aim at exporting their goods and services outside Ghana, but cannot do so because of the unfavourable loan system and trade financing situation in the country.
“Our members do not have the capacity to export. Most of our members are unable to access loans to expand their businesses and hence, focus on exporting to the international market. The banks we have in the country are mostly commercial ones and hardly provide long term financial facilities and loans to us.
Attracting financing for businesses is very difficult. The agencies that are ready to give us the money are also doing so at high-interest rates and this serves as a disincentive for our members,” Chairperson of AGI-Accra, Tsonam Cleanse Akpeloo shared at the monthly research press briefing organized by the Ghana International Trade and Finance Conference (GITFiC).
The AGI Chairperson posited that for Ghanaian industries to prosper and break into international markets, then they should be granted access to long term financing for expansion with government reviewing “the cost of assessing these monies. Because if you borrow at high-interest rates, you can never compete with businesses in other countries who enjoy low-interest rates.”
He added that the cost of power also affects business expansion in Ghana especially as they (businesses) end up spending 30 percent of their production cost on power. “The cost of power is very high in Ghana whiles some businesses in other parts of the world only pay cents per kilowatt of power consumed.
The association which is happy about talks of the Development Bank of Ghana said, “This is good news to us and we are yet to receive full modalities of the bank. But if it provides financing for our business expansion, we will be glad.”
Businesses in Ghana have had difficulties in assessing loan facilities to expand. The high cost of production also makes local goods far more expensive than imported ones and this has led to promising businesses failing.
To resolve issues on access to loans for businesses, Ghana and the European Investment Bank have signed an agreement for the provision of a one hundred- and seventy-million-euro (€170 million) facility for the establishment of a new national bank, the Development Bank Ghana (DBG).
DBG is an integral feature of the GH¢100 billion Ghana Cares ‘Obaatampa’ Project, which is seeing to the revitalization of the Ghanaian economy following the onset of COVID-19.