Ghana: High repayment risks identified as major constraint to access to finance by businesses
The aftermath of the COVID-19 pandemic continues to cast a shadow over Ghana’s business landscape, as revealed by the Fourth Wave of the Ghana Business Tracker Survey conducted by the Ghana Statistical Service (GSS).
A stark finding from the survey underscores the persistent challenges faced by firms in accessing finance, underscoring the formidable hurdles impeding economic recovery and growth.
A staggering 85 percent of surveyed firms across all size categories lamented the arduous task of accessing finance, painting a grim picture of the prevalent barriers obstructing capital infusion into businesses.
Topping the list of impediments is prohibitive high interest rates, cited by 51 percent of respondents. This unwelcome reality compounds the financial burden on businesses, constraining their ability to leverage capital for investment and expansion endeavours.
Furthermore, the survey underscores the reluctance of financial institutions to extend support, with 30 percent of firms citing unwillingness as a significant obstacle.
Lenders’ unwillingness to extend credit exacerbates the financing conundrum, stifling access to crucial capital infusion avenues vital for business sustenance and growth.
High repayment risk was another constraint to accessing financing from financial institutions with 26 percent of firms grappling with the daunting prospect of repayment obligations.
Rounding off the litany of constraints is the perennial issue of inadequate collateral, with 16 percent of firms bemoaning the lack of collateral requirements by financial institutions to access credit or loans.
In light of the findings by the GSS, policies aimed at fostering a conducive lending environment, mitigating interest rate burdens, and bolstering collateral frameworks are imperative to fortify the resilience and competitiveness of Ghana’s business ecosystem.
