Vice president Dr. Mahamudu Bawumia has appealed to commercial banks to make credit more accessible to young entrepreneurs by reducing the cost of borrowing.
According to him, the significant gains being reaped from the economy as a result of sound government policies should make it possible for the banks to give private businesses some credit incentives.
“This is my appeal to commercial banks to respond positively to the recent downward trends in the Central Bank’s policy rate setting,” Dr. Bawumia stated when he addressed young entrepreneurs at the NYA-CAYE Youth Entrepreneurship Forum at the Accra Digital Center on Friday, March 23, 2018.
“A reduction in the policy and Treasury bill rates must signal the desire to reduce the cost of borrowing and to make credit more accessible to businesses, especially to young entrepreneurs like you,” the Vice President stressed.
Dr. Bawumia assured that the government will also play its part by being fiscally disciplined to maintain a sound economy.
“Fiscal deficits mean that government must borrow to finance spending. High and persistent deficits mean more borrowing, puts upward pressure on interest rates and makes it difficult for the private sector to get credit from the banks. Government therefore is working to reduce its fiscal deficits and therefore cut down on its appetite for borrowing.
“In addition to its financial discipline, cutting down on spending and raising more revenue, government is also taking steps first to deal with legacy borrowing which is imposing burden on the commercial banks, and second to improve the overall access to and inclusion of the financial sector,” the former deputy governor of the Central Bank pointed out.
Dr. Bawumia outlined some of the measures undertaken as “the issuance of 7-year and 10-year energy bonds to reduce exposures of banks arising from legacy debts owed by state owned institutions such as TOR, VRA.
“The recently launched National I.D and digital property addressing systems are powerful tools that will help banks in easy identification and traceability of seekers of loans. This has the potential to reduce the level of risk priced in the lending rates.
“The use of various measures to enhance financial inclusion and interoperability of payment systems, banking the unbanked, and formalization of the economy have far reaching consequences of improving the revenue streams of banks.”
He added: “We will continue to institute measures that will increase confidence in the future directions of the economy. By good financial management and fiscal prudence, and by removing uncertainties about our commitment to build a better economy, our goal is to signal downward trends in inflationary expectations, and encourage downward trends in the monetary policy rate setting and interest rates pricings by commercial banks.”
Dr. Bawumia called on the youth to take advantage of government initiatives such as the National Entrepreneurship and Innovation Plan (NEIP) and funds available to the Ministry of Trade and Industry to provide stimulus package to some selected ailing local business.
“The essence of providing all these direct and indirect services to both start-ups and existing businesses is to equip you to have the required skills to do business and to be successful. I am also inviting you to take keen interest in the key strategic flagship development initiatives of government such as the One District One Factory, One District One Warehouse, One Village One Dam.”
The Summit was organized by the National Youth Authority and the Commonwealth Alliance for Young Entrepreneurs, Ghana chapter to bring young entrepreneurs across Ghana to put issues affecting their activities in business right before government as a partner.