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Grantees Funded under BUSAC Fund Phase I
Name of Applicant : Empretec Business Forum (EBF)
Title of Action : National dialogue on difficulties in accessing finance for development of SME's in Ghana
Sector : Business
Geographical Area : Greater Accra
Action ID : # 0-5
Action Score : 66.5%
Total cost of Action : ¢400,991,400
BUSAC's % of Total cost : 90%
Self Financed : 10%
Action Duration : 18 months
Support from Outreach Facility : ¢-
Summary of the proposed Action : (a). 1. NEED FOR THE ACTION
The problem evolves from the fact that over 92% of SMEís in the Private Sector in Ghana are denied funding or have very limited access to finance from the formal financial institutions. Indeed if such is the case or reality, then there is a need for an action. EBF is taking the initiative to undertake this action on behalf of its members and all SMEís.
The banks argue that SMEís are high risk business clients. The SMEís also claim the banks do not either understand their plight or do not have the patience to do so due to their strong desire for high margins on every transaction. The banks further accuse the SMEís of clumsiness in their business transactions as they do not keep proper and adequate records to enable effective assessment of their financial proposals. Financial Intermediaries now claim that the environment has improved considerably though not absolutely. But the SMEís say its only a facade, many enterprises in the rural and smaller towns still do not have easy access to credit to finance their businesses. The bankers lackadaisical manner of responding to reduction in the prime rates of interest is a case in point. The poor rate of savings mobilization by the formal banking system is another indicator of lack of confidence. A recent survey by Support Program for Enterprise Empowerment and Development (SPEED) on 15 banks in Accra, (Financing your Business August 2004), showed that there is a significant Gap. Therefore there is a need for an action to bridge the gap between the lenders and borrowers in the sector to break this barrier to accessing finance for the Development of SMEís.

A National and International open dialogue among all stakeholders is hereby being proposed to:

  • Provide a platform to develop the pertinent and in-depth understanding of the causative factors that has lead to the banks denying or limiting access to funding of SMEís.
  • Address the root causes of the problem and
  • To bridge the gap between lenders and borrowers in the SME sector.
    EBF proposes to implement this Action Plan through:

  • Regional Surveys: to collect base data for problem identification and definition.
  • Regional Workshops (round table): to verify and analyze definition further and validate causes and effect of problem and suggestions for various options for a way forward.
  • To identify countries where similar problems have been solved, learn through development of case studies of how success was achieved as major input to the National workshop.
  • National Workshop ( Round Table): Major stakeholders to assemble and dialogue based on the findings from the regional reports and issues arising from the Regional surveys and Regional Workshops. This would be supported by Radio Talk shows, TV interviews and shows. The implementation is targeted at touching the sentiments of every stakeholder on this matter.
  • International Workshop: As this problem has International dimensions, the international forum will have the objective of defining the international dimensions, causes and effects. Special cases of successful
  • The implementation of this action plan will be facilitated by seasoned Business Development Service Providers (BDSPís).
  • (d). 4. EXPECTED IMPACT:
  • A clear and in depth understanding of the principal barriers that has lead to the banks denying or limiting SMEís access to funding.
  • A clearer understanding of bankís perception of SMEís.
  • Clear Policy Guidelines by policy makers and code of conduct for the private sector borrowing and lending by
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