BoG Governor urges banks to deepen financing for SMEs, agriculture

The Bank of Ghana's Governor, Dr Johnson Pandit Asiama, has urged commercial banks in Ghana to broaden the range of financing options available to small and medium-sized enterprises (SMEs), with a particular focus on the agricultural sector. In a meeting with bank executives in Accra, Dr Asiama emphasized the need for banks to develop flexible lending products that are tailored to the unique needs of SMEs.

He stressed that banks must better understand the businesses and sectors they serve, designing financing products that reflect these specific requirements. Dr Asiama highlighted the critical role banks play beyond their traditional function as financial intermediaries, urging them to serve as vital business partners in Ghana's economic growth and transformation.

Despite the increasing demand for credit, many SMEs, especially those in agriculture, continue to encounter difficulties in accessing finance due to banks' perceptions of their high-risk profiles. To address this, Dr Asiama suggested that banks create adaptable credit products that take into account the seasonal nature of agricultural activities, aligning loan repayment schedules with borrowers' cash-flow patterns.

This approach would allow SMEs to obtain financing on terms that better suit their businesses, thereby supporting growth across agricultural value chains. The Governor noted that recent financial conditions have improved significantly, with interest margins becoming increasingly compressed. This shift has led to a notable increase in credit creation within the private sector, providing banks with an opportunity to channel more resources into productive sectors of the economy.

Dr Asiama also called for banks to enhance customer engagement and financial education initiatives to promote compliance and confidence in banking services. Concerned about the rising instances of returned cheques and non-compliance, he urged banks to responsibly utilize approved overdraft facilities or funds from linked accounts before resorting to cheque returns.

To improve the reliability of cheques as a payment instrument, Dr Asiama recommended that banks strengthen their monitoring mechanisms and customer engagement strategies, aiming to minimize repeat occurrences of cheque-related issues. Regarding digital lending, Dr Asiama cautioned banks to exercise heightened due diligence when partnering with digital credit service providers.

He emphasized the importance of verifying the licensing status of these providers with the Bank of Ghana before entering into any partnerships. The central bank has been actively working to curb unlicensed digital lending activities, including publishing entities operating without the necessary approval. Dr Asiama also encouraged banks to develop specialized investment products for Ghanaians living in the diaspora, aiming to channel remittances beyond basic transfer services into savings and productive investments.

He pointed out that banks currently lack a sufficient array of off-the-shelf investment products specifically designed for the Ghanaian diaspora. The Governor assured that the Bank of Ghana would continue to provide the regulatory and policy environment necessary to foster a robust, resilient, and growth-oriented banking sector.

Dr Asiama stressed the importance of continued collaboration between the regulator and the banking industry to tackle emerging challenges and unlock opportunities for businesses, households, and the broader economy.