Most financial institutions have stopped lending to SMEs in the last 12 months – Joe Jackson
CEO of Dalex Finance, Joe Jackson, has averred that most financial institutions in the country have stopped lending to SMEs in the past year, asserting this is due to the non-availability of liquidity.
According to him, this is a result of the push of money into Government T-Bills by most financial institutions for significant returns rather than lending to the private sector.
“Most financial institutions have stopped lending in the last 12 months because there is no liquidity, it is the biggest issue for us right now and T-Bills are crowding out the market, so why would people bring money to me to on-lend and be given less interest rate when T-Bills will give them 27% or more.
“SMEs are in trouble because the situation has become very dire,” he quipped speaking on the NorvanReports & BudgIT Ghana X Space Discussion on Sunday, on the topic, “Restoring Ghana’s Macroeconomic Stability After A Difficult Debt Restructuring.”
Touching further on the issue of the T-Bills, Mr Jackson urged the Government to force down the high rates on the short-term debt instruments as it did in April last year – 2023.
“The Government rejected bids in April last year and got new rates, so why have we let the rates rise again. The Government must force the rates down again. Because if we don’t, the rates won’t come down enough to see reduced interest rates,” he added.
Mr Jackson speaking during the X Space Discussion highlighted the devastating impact of the country’s debt crisis on businesses particularly SMEs and the macro economy at large.
He noted that on the back of the debt crisis coupled with high inflation and the depreciation of the local currency, the working capital and earnings of businesses have been drastically eroded.
Mr Jackson therefore urged SMEs to take up opportunities prevalent in the export industry in order to survive.
“Given the current economic challenges, businesses particularly SMEs should look at the opportunities in the export industry and export more to survive, that is what will save them,” he remarked.
