Former Vice Chancellor of the University of Ghana, Legon, Professor Ernest Aryeetey has advocated the introduction of a regulation that allows major financial institutions to own and operate microfinance firms to ensure its effectiveness.
Microfinance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services.
According to the Professor, the current ownership and operational system of the sector was responsible for its ineffectiveness and challenges, adding that such regulation would empower banks to determine the best working strategy that was in line with acceptable financial management schemes.
“This regulation is already being used by Sri Lanka and Kenya and it is working to meet the financial needs of Small and Medium Enterprises (SMEs) in those countries,” he said.
Professor Aryeetey made these remarks in an interview with The Ghanaian Times on the sidelines of the 3rd Institute of Financial & Economic Journalists (IFEJ) Flamingo Awards for Business and Financial Journalism.
The event, on the theme, “Strengthening Micro Finance Institutions to enhance the growth of rural and micro enterprises”, saw Famous Kwesi Atitsogbe of Multimedia Group Limited emerge winner of the ultimate award, Business and Financial Journalist of the Year as well as Best in Tourism and Microfinance, Rural Banking and SMEs category.
As part of his award, Mr. Atitsogbe also won the opportunity to attend the World Bank Spring meetings in Washington DC, United States of America (USA) for being adjudged overall best Financial and Economic Journalist.
Kwabena Adu Koranteng of the New Crusading Guide newspaper took home the Best in Extractive and Best in Development Awards whiles Best in Business Manufacturing went to Rebekah Adwoa-Awuah of the Ghana Broadcasting Corporation.
Others were Adnan Adams Mohammed who won Best in Finance category and Graphic Business’ Maxwell Akalaare Adombilla, who emerged winner in the Best in Agribusiness category.
According to Professor Aryeetey, the country could significantly reduce the alarming unemployment rate should SMEs grow and create more jobs for the teeming unemployed youth.
“SMEs, if properly run, can fill the unemployment vacuum the country is currently saddled with,” he added.
Small businesses are recognised as the main engines for growth and development because of their significant contributions to economic growth and prosperity.
Studies have shown that SMEs contribute over 55 per cent of gross domestic product (GDP) and over 65 per cent of total employment in high-income countries.
A University of Ghana study conducted in the past estimated that small enterprises in Ghana provide about 85 per cent of manufacturing employment and also further stated that SMEs were believed to contribute about 70 per cent to Ghana’s GDP and account for about 92 per cent of businesses in Ghana.
By Claude Nyarko Adams