Financing Sme in Ghana Benefts and Challenges a Case Study of Ghana Commercial Bank Ltd
CHAPTER ONE
INTRODUCTION
1.0 GENERAL OVERVIEW OF THE FINANCIAL SECTOR
Ghana financial system is made up of a number of banks and non-bank financial institutions including the Bank of Ghana which as the Central Bank has the responsibility of advising government on the implementation and control of monetary policies. Other players of the financial sector include the Commercial banks, Merchant banks, discount houses, Insurance companies leasing companies, venture capital, mortgage finance institutions, stock exchange and credit unions, Direct financing of projects in the country is provided by the commercial and other banking institutions.
Bank of Ghana is mandated to have overall supervisory and regulatory authority in all matters relating to banking and non banking financial businesses. The objective is to achieve a sound, efficient banking system in the interest of depositors and other customers of these institutions and the economy as a whole.
The regulatory and legal frameworks within which banks and non bank financial institutions as well as foreux bureaus operate in Ghana are the following:
Bank of Ghana Act 2002, Act 612 Banking Act 2004 (Act 673)
Financial Institutions (Non Bank) Law 1981 PNDC Law 328 Companies Code Act 179, 1963. 1 Bank of Ghana Notice/Directives/Circulars and Regulations.
Bank of Ghana is also charged with responsibilities of ensuring that, the financial system is stable, it also serves as facilitator for wealth creation, economic growth and development. In addition to these, Bank of Ghana is charged to ensure that depositors funds with the banks and non banks are safe. The solvency, good quality assets, adequate liquidity and profitability of the banks and non bank financial institutions are monitored by Bank of Ghana. It is also the responsibility of Bank of Ghana to ensure that banks and non banking financial institution adhere to statutory and regulatory requirements and also enforces compliance. Bank of Ghana
INTRODUCTION
1.0 GENERAL OVERVIEW OF THE FINANCIAL SECTOR
Ghana financial system is made up of a number of banks and non-bank financial institutions including the Bank of Ghana which as the Central Bank has the responsibility of advising government on the implementation and control of monetary policies. Other players of the financial sector include the Commercial banks, Merchant banks, discount houses, Insurance companies leasing companies, venture capital, mortgage finance institutions, stock exchange and credit unions, Direct financing of projects in the country is provided by the commercial and other banking institutions.
Bank of Ghana is mandated to have overall supervisory and regulatory authority in all matters relating to banking and non banking financial businesses. The objective is to achieve a sound, efficient banking system in the interest of depositors and other customers of these institutions and the economy as a whole.
The regulatory and legal frameworks within which banks and non bank financial institutions as well as foreux bureaus operate in Ghana are the following:
Bank of Ghana Act 2002, Act 612 Banking Act 2004 (Act 673)
Financial Institutions (Non Bank) Law 1981 PNDC Law 328 Companies Code Act 179, 1963. 1 Bank of Ghana Notice/Directives/Circulars and Regulations.
Bank of Ghana is also charged with responsibilities of ensuring that, the financial system is stable, it also serves as facilitator for wealth creation, economic growth and development. In addition to these, Bank of Ghana is charged to ensure that depositors funds with the banks and non banks are safe. The solvency, good quality assets, adequate liquidity and profitability of the banks and non bank financial institutions are monitored by Bank of Ghana. It is also the responsibility of Bank of Ghana to ensure that banks and non banking financial institution adhere to statutory and regulatory requirements and also enforces compliance. Bank of Ghana
References: 1. Amo, F and Okyere, E. (2004). A Study of SMEs Finance in Ghana. A report submitted to Management of GCB. 2. Aryeetey, E. (1993), “Policy on Sectoral Credit Allocation and Credit Flow to small Enterprises in Ghana, in A.H.J. helmsing and T. Kolstee (ends), Small Enterprises and Changing Policies, IT publications, London 3 5. Easterly, G and Levine, R (1994) Financial Integration and Development in Sub-Saharan Africa: A Study of Informal Finance in Ghana, Working Paper 78, Overseas Development Institute, London. 6. Kowubaa Ltd. (2000). “Rural Finance Review Study,” Report prepared for Ministry of Finance/World Bank NBFI Project. 7. McKinnon, R.I. (1993), Money and Capital in Economic Development, The Brookings Institution, Washington, D.C. 8. Mensah, S. (2004). “A Review of SME Financing Schemes in Ghana,” Presented at the UNIDO Regional Workshop of Financing Small and Medium Scale Enterprises, Accra, Ghana, March 2004 9 10. Offei, C. (1965). “Rural Credit in Ghana,” Legon: University of Ghana, Master’s thesis. 11. Osei-Bonsu, E. (1998) “The State of Rural Banks in Ghana”, Paper prepared for the Association of Rural Bank Seminar Accra. 12. Owusu Ansah, Mark (1999). “Nsoatreman Rural Bank – Ghana: Case Study of a Micro-Finance Scheme,” Washington, DC: World Bank, Africa Region Studies in Rural and Micro Finance No. 6 13 14. Popiel, P.A. (1994), Financial Deepening in Economic, Oxford University press, Oxford. 15. World Bank (1994), Adjustment in Africa: Reforms, Results and the Road Ahead, a World Bank Policy Research Report, Oxford University Press, Oxford. Pp 113. 16. Webster, L. (1991) World Bank Lending for Small and Medium Enterprises, World Bank Discussion Paper 113, Washington, D.C. APPENDIX 2 Sectors and Amounts Approved for SMEs (1995 – 2005)