Give Financial Institutions the Confidence to Lend to the Private Sector
The Dalex Finance and Leasing Company Limited has appealed to government to give financial institutions confidence in lending to the private sector.
Mr Kenneth Kwamina Thompson, Chief Executive Officer of Dalex Finance, noted that financial institutions in Ghana were ready and willing to lend to individuals and businesses particularly Small and Medium-sized Enterprises (SMEs).
He said it was unfortunately that there were no ‘incentives’ for these businesses to repay the loans.
Mr Thompson stressed that if measures to facilitate funding of SMEs by financial institutions were put in place, it could help to significantly increase the country’s consumer debt to GDP ratio by approximately 19 per cent.
Mr Thompson who is also a Fellow of the Institute of Chartered Accountants in England and Wales, said neighbouring countries such as Togo, Ivory Coast and the Gambia had higher consumer debt to GDP ratios and South Africa was doing over 100 per cent.
“With a GDP of approximately $60bn, additional lending to the private sector could increase by $12bn,” Mr Thompson told the Ghana News Agency on the side lines of the tenth edition of the Business and Financial Times Ghana Economic Forum.
Mr Thompson therefore called for acceleration of the government’s digitisation drive and effective commercial courts to release private sector funding for economic development.
The Dalex Finance Chief Executive said the acceleration of government’s digitisation drive and speedy prosecution of debt defaulters by commercial courts in the country will transform the private sector.
Mr Thompson noted that with the acceleration and expansion of government’s digitisation drive, linking the databases of various statutory bodies such as the Ghana Revenue Authority, SSNIT, Land Registry, bank accounts, telecommunications and others.
He said the provision of access to these databases for a fee, will make it easier for financial institutions to assess credit risk.
Mr Thompson also, noted that the speedy prosecution of debt defaulters by the commercial courts and enforcement of court orders by bailiffs with enhanced powers will give financial institutions additional confidence to lend.
“Commercial courts must sit day and night to prosecute debt defaulters. Financial institutions are willing and able to pay for the services. Let’s make the lawyers and the judges rich,” he said.
“We need to release the private sector to fund economic development and financial institutions are willing and able to provide the funding”.
“Dalex Finance for instance lends only to public sector employees because we can confirm their identification, collect our money and they cannot easily run away.
“So to increase private sector lending to SMEs, government must provide the appropriate infrastructure for identification and collection, and if you don’t pay your loan, we shut you down”.
Mr Thompson noted that Dalex Finance is using digital lending model, which allowed it to continue to make salary loans without the client coming to any physical branch; “We saw the future of work as digital and prepared the infrastructure for this reality long before the global pandemic hit”.
He also tasked the corporate world to undertake talent intensity which requires the attraction and retaining the best employees and pays them well; “that is the only way to continue to deliver value to clients and shareholders”. GNA