Ghana’s small and medium-sized enterprises face a financing problem that is less about a shortage of capital and more about how the financial system connects available funds to businesses that need them, Second Deputy Governor of the Bank of Ghana, Mrs. Matilda Asante-Asiedu, said.
Delivering the Distinguished Digital Finance Lecture, Mrs. Asante-Asiedu said banks, pension funds, investors, development finance institutions and risk-sharing schemes have resources that could support businesses, but the mechanisms for moving that capital to SMEs remain inadequate.
“Ghana does not have a capital shortage. It has an architecture problem,” she said.
The disconnect is particularly evident in the contrast between how quickly businesses can receive payments and how slowly they can secure financing, she said.
An SME in Kumasi can receive payment through Ghana’s instant payment infrastructure within seconds, but may wait three months or longer for a working-capital loan decision, even though the transaction that demonstrates its ability to generate income has already taken place.
Mrs. Asante-Asiedu said the financial system is not making sufficient use of the information contained in those transactions when assessing borrowers.
A business’s payment flows, savings patterns and merchant activity can show how frequently it earns money, whether revenues are rising or falling and how predictable its cash flow is, she said.
“That is not background information; it is a credit record. We have simply not built the habit of reading it as such,” she said.
The financing gap is particularly significant for SMEs, with recent estimates putting Ghana’s shortfall at close to $4.8 billion annually, according to the Second Deputy Governor.
She said the country’s financing market also leaves a gap between large lenders and microfinance providers, with neither adequately serving businesses seeking medium-sized, short-term working capital.
Large lenders, she said, often require substantial collateral and lengthy credit assessments, while microfinance providers generally offer smaller loans at higher rates and over shorter periods.
“A firm that needs five hundred thousand cedis for 30 to 90 days to fulfil a contract is not served by either of them,” she said.
Invoice discounting, which allows businesses to raise working capital against outstanding receivables, is one instrument that could help fill that gap, but remains underdeveloped relative to the needs of Ghana’s SME sector, she said.
The Second Deputy Governor also argued that the financial system needs to look beyond traditional measures of business security as more companies build value through contracts, receivables and transaction histories rather than fixed assets.
A confirmed purchase order, an export contract or a multi-year service agreement, she said, represents an identifiable claim on future income that can be assessed by a lender, even though such claims are not currently treated as collateral in the same way as land, buildings or financial instruments.
The Bank of Ghana is also looking to open banking and open finance as a way of improving how financial data moves between institutions and how lenders assess businesses.
Mrs. Asante-Asiedu said the success of those frameworks should not be judged simply by the number of APIs or systems connected, but by whether they result in more credit reaching SMEs because lenders can access and assess their financial histories.
That would allow a business to use its transaction record to seek financing from another provider where its existing financial institution cannot offer suitable terms, she said.
For the central bank, the broader challenge is therefore to improve the mechanisms through which capital already available in Ghana’s financial system reaches productive businesses, particularly SMEs that may have demonstrated commercial activity but remain unable to meet conventional lending requirements.
