Accra-Ghana, April 29, GNA – A private equity and international business consultant, Dr Richmond Odartey Lamptey, has urged commercial banks to establish impact investment funds post Ghana’s Domestic Debt Exchange Programme.
Dr Lamptey noted that the DDEP had affected the ability of commercial banks to provide financial support to businesses due to some losses incurred.
It has, therefore, become important for commercial banks to explore innovative capital financing means, including impact investment funds to shore up liquidity and be in a better position to resource SMEs – the engine of economic growth.
Such funds, he said, would come with investment capital, technical assistance for both banks and businesses, and support the attainment of financial and developmental goals.
He said this in an interview with the Ghana News Agency at a stakeholder engagement and dissemination conference in Accra, which discussed ways of restoring commercial bank’s liquidity for SME financing post-DDEP.
“You go to the bank nowadays as an SME and they tell you that we’re sorry we can’t help you. Some even tell you that we’re giving our money to importers,” a women-led SME operator said during the conference.
Dr Lamptey, who is also an Entrepreneurship and Strategy Lecturer at the University of Greenwich, London, advised commercial banks to, urgently establish impact investment units dedicated to SMEs.
“There must be a paradigm shift in how commercial banks conduct financial intermediation – not just collect deposits and obtain the necessary returns.
They should proactively set up impact investment funds and seek for additional funding and invest them to finance SMEs,” he said.
He noted that in recent years, developed economies, multilateral and development finance institutions were channeling such capital to developing countries through commercial banks and other financial intermediaries to fund businesses, including SMEs.
This is a window of opportunity for commercial banks in Ghana to establish impact investment units and seek for additional funds to ensure that SMEs are empowered to generate growth in the economy, Dr Lamptey said.
He was confident that Ghana’s SME sector would be an engine of economic stability and sustainable growth should commercial banks explore utilising impact investment funds.
He recommended that banks that access impact investment funds should consider areas of developmental needs of Ghana, including agribusiness, health, education and digital infrastructure development.
The reporting guidelines and involvement of the fund givers, he said would ensure that the monies were given to SMEs capable of sustaining their business, creating employment and contributing to economic growth.
Mr Clifford Duke Mettle, Chairman, International Chamber of Commerce-Ghana, also indicated that the DDEP had made some banks to incur losses, leading to a reduction in loans to particularly, the SME sector.
“For 2022 alone, almost GHS6.1 billion was the loss incurred by banks and this is a serious problem to the balance sheet of banks post-DDEP, hence, the need to explore ways to restore commercial banks liquidity and ability to support SMEs,” he said.
“All the commercial banks should intentionally put impact investment funds in place because they have advantage – the interest rate is lower, and help in the sustainability of businesses,” Mr Mettle said.
He said reliefs by the Bank of Ghana and the establishment of the GHS15 billion Financial Stability Fund and the Development Bank Ghana seeing the need to support commercial banks to shore up liquidity would be helpful going forward.
Impact investment makes commercial become more finance oriented, have de-risking opportunities and focus on a dual mission of financial returns and social and developmental impact.
The funds, which is noted for yielding positive financial returns and developmental impacts, is being flown to developing countries to support the achievement of the United Nations (UN) sustainable Development Goals and SMEs.
