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PRESS RELEASE (Strengthening the Non-Banking Sector: A Shared Responsibility)

PRESS RELEASE

Strengthening the Non-Banking Sector: A Shared Responsibility

On May 31, 2019, the Bank of Ghana (BoG) revoked the licenses of 347 insolvent micro finance companies. This action forms the second phase of the on-going reforms in sanitising the financial sector towards improving operational resilience and confidence in the system. It is expected that government’s release of GHS900 million will enable the Receiver pay depositors after validation of claims.

As the representative voice of the business community, the Ghana National Chamber of Commerce & Industry (GNCCI) commends BoG for the steps taken in revoking the licenses of these insolvent companies and government’s release of funds, given the imminent threat they pose to the stability of the financial system, depositor’s funds, and small businesses. Nonetheless, the GNCCI is worried over the increasing number of failed and the collapsing of financial institutions by BoG. The disappearance of these businesses raises critical questions about operational resilience and our collective effort at building and supporting Ghanaian businesses to participate in the inclusive growth agenda with improved collective efficiency.

Microfinance companies provide unique financial services to small businesses who play significant role in the economic stability and development of our national economy. Extant literature supports the connection between microfinance institutions products and small businesses in emerging economies; underscoring the positive effects of microfinance products to small business growth, with micro loans being the dominant influence.

Per the BoG’s assessment, majority of these companies veered off their mandate by acquiring funds from retail and institutional sources and lending them at exorbitant costs in addition to diverting much of the funds into private ventures. These companies were also faced with weak capitalisation and poor governance system making them vulnerable and unsustainable.


Following from these causes, the GNCCI urges BoG to strengthen its supervisory and regulatory mechanism in ensuring strict compliance by these companies to industry standards to avert future collapses. These companies are crucial in providing financial support and assistance to small businesses and individuals, who may have limited access to the traditional banks’ products given the requirements.

The issuance of licenses must be supported with proper and robust enforcement mechanism as well as avenues to continuously build the capacity of these Specialised Deposit-taking Institutions (SDIs) to mitigate risks and improve operational resilience and compliance. There is need for a conscious and collective effort to support and GNCCI Press Release  (Strengthening the Non-Banking Sector: A Shared Responsibility)  develop Ghanaian businesses to succeed. The GNCCI calls for better regulation in the financial sector that reflects the needs of the sector with more positive impacts and addresses critical issues such as regulatory lapses, weak enforcement and compliance.

It is our expectation that the remaining 137 microfinance companies and 31 microcredit companies will demonstrate good faith and constantly monitor and manage their risk exposures in building a healthy financial services system. The BoG’s anticipation of little or no job losses is untenable and shrouds the concomitant issues surrounding the collapse of these companies. BoG must come clear on the data and needs to engage stakeholders in addressing any potential job losses associated with the on-going reforms.

While commending the process initiated for payment of verified claims at designated  financial institutions, the GNCCI urges the Receiver and the BoG to take into account the proximity between these institutions and depositors, particularly those living in the rural and peri-urban areas to minimize additional cost in accessing depositor’s funds. Government must continue to provide the right incentives on time to enable these institutions to deliver on their mandates.

The Chamber wishes to assure the private sector that it will continue engaging government, the Bank of Ghana and other relevant stakeholders to ensure a safe, sound, supportive, and stable banking sector and the larger financial sector. This will essentially help provide affordable credit to enable small businesses grow and create more sustainable jobs.

Let us all support the private sector by encouraging a healthy banking and financial transaction to protect the integrity of the financial sector.

Thank you.

Signed

Nana Dr. Appiagyei Dankawoso I 

President, Ghana National Chamber of Commerce & Industry

Accra, 17th June, 2019.

 

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Ghana National Chamber of Commerce Undertakes Situational Analysis of Ghana's Port

A research commissioned by the Ghana National Chamber of Commerce (GNCC) in collaboration with the Business Sector Advocacy Challenge (BUSAC) Fund has revealed that Ghana’s ports notably the Tema and Takoradi ports and Kotoka International Airport are facing challenges of delays in clearing goods and cost escalation. 

This came out at a sensitization and validation workshop on the research, Situational Analyses of Tema and Seaports and Kotoka International Airport. The workshop was organised by the GNCC on 15th June, 2017 for importers, exporters, state and private institutions involved in port operations.

  

In his opening remarks, Mr. Mark Badu-Aboagye (CEO, GNCC) noted that the advocacy action on improving operations at the ports had become necessary because of the difficulties being faced by importers and exporters. These difficulties have hindered the nation from realizing the full benefits of international trade as well as its comparative advantage over its huge natural resource base. 

Presenting the research report to the participants, the research consultant in the person of Dr. Kwabena Nyarko noted that the survey covered 400 importers and exporters using questionnaires and direct interviews to elicit information on the import and export business. The analyses covered three main aspects of port operations in Ghana: port facilities; port procedures; and cost of doing business at the country’s port.

The findings revealed that Ghana has standard facilities required to facilitate imports and exports business; however, the facilities are overstretched given the volumes of trade recorded in recent times. Importers and exporters complained of long hours spent on customs clearance. 

According to the report, delays at the port are as a result of human interference, congestion at ports, duplication of functions, unnecessary procedures, equipment breakdown and the nature of port facilities. In addition to the delays, there are also multiplicity of taxes and charges that are higher than global averages. It also noted that the clearance process and procedure is purposely designed to be complicated and intrusive precisely because there appears to be too much efforts and investment to cheat the state in terms of revenue. Thus, the system is so designed to curb such behaviours. These factors affect the performance of ports in Ghana.

The report also highlighted that most of the respondents were concerned about the cost of doing business with costs ranging between GH¢100 and GH¢650,000. Adding to these costs are monetary payments involved in informal arrangements that businesses resort to. 

The report recommended that the current expansion and upgrade programme should be implemented on a continuous basis which should consider equipment (backup systems at the revenue terminal or division of the Ghana Revenue Authority, cranes and forklifts, more and better scanners), physical space and proper road network at the ports, more and better trucks, and provision of clinics for first aid and also restrooms. Recruitment of more workers to avoid delays occasioned by shortage of staff was also mentioned. 

It also noted that there is the urgent need to streamline and simplify the procedures as the official processes are too winding and complicated. This requires undertaking a review to eliminate some of the institutions and eliminating duplication. It further recommended that supporting agencies should not be allowed to use importers and exporters as cash cows for internally generated funds. Finally, as gateway ports, the ports in Ghana must facilitate the movement of goods along the supply chain.

  

Source: Research and Advocacy, GNCC

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About GNCC

The Ghana National Chamber of Commerce is an association of business operators, firms and industries with interests spanning every sector of private enterprise in Ghana. Read more

Head Office

Ghana National Chamber of Commerce
1st floor,World Trade Center,
Opp. Children's Park, National Theatre - Accra
P.O Box 2325,Accra

Digital Address: GA-077-2864

233(0) 302 662860 / 233(0) 544114306

info@ghanachamber.org

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