Stakeholders and players in the micro-credit sector have committed to supporting growth of the micro, small and medium enterprises (MSMEs) in their bid to lead the country’s post-COVID-19 economic recovery efforts.
With over 90 percent of businesses in the country being MSMEs, contributing collectively to about 70 percent of the GDP, MSMEs are the backbone, foundation and true engine of growth for the economy.
Given the above, stakeholders and players in the micro-credit sector have resolved to open their doors for MSMEs to access financial support in the form of loans to aid in their upscaling and growth – in order to take full advantage of the prospects and opportunities offered by the African Continental Free Trade Agreement (ACFTA), which will play a key role in economic recovery efforts.
The micro-credit sector’s gross loans and advances amounted to GH¢312million as at December 2021. This amount represented a growth of 15.13 percent compared to the 8.3 percent recorded in 2020. The higher growth in gross and net loans and advances reflects the higher credit demand by micro, small and medium enterprises.
“We appreciate the fact that globally, and in our country, we are all facing serious economic challenges which have also impacted the micro-credit sector. It is not in doubt that small loans play a critical role in supporting MSMEs. We therefore call for greater support and engagement to drive the sector,” Chairman of the Micro-Credit Association Ghana (MCAG), Wilberforce Ofori, stated during the Association’s 13th Annual General Meeting.
Acknowledging the negative impact of recent downgrades by rating agencies like Fitch and Moody’s on the ability of MSMEs to attract foreign investments, Mr. Ofori said the micro-credit sector is poised to lead the acceleration of inclusive and sustainable economic transformation with the MSMEs through accessible and cheaper loans.
“Access to credit enables businesses to expand, create jobs and reduce inequality. Financial inclusion is the bridge between economic opportunity and social outcome,” he stated in his speech at the AGM, themed ‘Building Partnerships and Synergies to Strengthen the Micro-Credit Sector’.
Meanwhile, the micro-credit sector posted massive gains in 2021 – with total assets increasing by 146.79 percent year-on-year to GH¢410million as at end of December 2021 compared to 36.3 percent growth in 2020.
The increase in asset growth was attributed to the gradual rebound in economic activities after COVID-19, and the increase in number of members reporting.
Again, shareholders’ funds continue to drive the funding of total assets with robust growth of 74.33 percent to GH¢304.8million as at December 2021, relative to the 74.14 percent growth recorded in 2020; with total borrowings reduced by 16 percent in December 2021 compared to 24 percent growth in the previous year, according to the report by MCAG.
Giving highlights of the sector’s performance as captured by the report during the AGM, Mr. Ofori said the Association’s accumulated funds stand at GH¢1.9million with actual revenues being GH¢1.2million, compared to a total budget revenue of GH¢1.4million at the end of 2021. The key revenue items were subscriptions, licence & licence processing fees, membership registration fees and training fees.
He said total expenditure amounted to GH¢780,340 as compared to a budgeted expenditure of GH¢1.24million, with the key expenditure items being on-site inspection and supervision expenses, personnel emoluments, governing council expenses, and general administrative expenses.
Attributing the sector’s performance in the year under review to good corporate governance, Mr. Ofori said the Association’s corporate governance structure has seen a healthy improvement with its balance of skill and experience – which has been extremely beneficial to the sector, particularly at a time when the country is reeling from acute economic challenges.
“This is buttressed by a comprehensive framework based on integrity, transparency and consensus building,” he stated, adding: “It is a reflection of the Association’s diverse competencies and expertise.”
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