The Association of Ghana Industries (AGI) has appealed to the Bank of Ghana(BoG) and government to review the implementation of loan moratoriums to reflect the repayment realities of businesses.
Chairman of the Agribusiness Sector of the AGI, William Agyei Manu, made the call during a sensitisation programme on the Borrowers and Lenders Act, 2020 (Act 1052), organised by the Bank of Ghana’s Collateral Registry in Kumasi in the Ashanti Region.
He said the sensitisation was important because many private sector operators previously had limited knowledge about their rights and obligations under the law.
“We as private sector, we are classified as borrowers, and our rights and obligations are enshrined in Section 59 of the Act. And today we are grateful that the Bank of Ghana has taken time to take us through the processes and the purpose which the private sector can take advantage and then secure a very unencumbered collateral transaction and processes that will also help us to scale up and expand our businesses,” he said.
Mr Agyei Manu said access to credit remains one of the major challenges confronting businesses in Ghana.
He said the AGI’s Business Barometer reports have consistently identified access to credit, alongside energy, as a key concern for private sector operators.
He explained that the association had engaged institutions including the Microfinance and Small Loans Centre (MASLOC) and financial institutions over challenges associated with accessing credit.
According to him, businesses sometimes have assets that could potentially be used as collateral, but face difficulties during the assessment process by lenders.
“Sometimes they will just tell you that, look, your property is not eligible, and this is where we have an issue,” he said.
He indicated that the sensitisation had helped private sector operators better understand the legal and administrative processes under Section 59 of Act 1052.
He also acknowledged the responsibility of borrowers to repay loans after accessing them.
“I think as lenders, we ought to also be very truthful to ourselves that once we take the loans, we should be able to pay,” he added.
However, Mr Agyei Manu said the issue of loan moratoriums remains a major concern, particularly for businesses whose investments require a longer period before generating returns.
He explained that repayment arrangements suitable for a retail business may not necessarily be appropriate for a manufacturing or agribusiness company.
“If you take the retail banking, for instance, somebody who is doing a buy and sell on a daily basis, his issue will be different from me as a manufacturer who would have to maybe procure an equipment from India or China or Germany and have to set it in six months’ time and begin production in seven or eight months’ time,” he said.
He therefore called for a review of how moratoriums are determined to reflect the nature and cash-flow cycles of different businesses.
“I’m not saying it should be a subjective convenient time, but it should be a matter of law,” he said.
According to him, although the law provides for an agreement between the borrower and lender, borrowers’ concerns are not always adequately considered when repayment schedules are determined.
He warned that failure to address the issue could contribute to an increase in non-performing loans in the country.
He said the concern was particularly relevant to businesses in the agribusiness sector, where production and revenue cycles may take longer than those of businesses operating on a daily retail model.
“There are different payment periods, you know, or trajectory for each of these businesses, and we want this institution, the Bank of Ghana and government, to consider this concern, so that we discuss the issue of moratorium,” he said.
He noted that the issue extends beyond retail banking to development finance institutions, including the Ghana EXIM Bank.
Mr Agyei Manu said the Bank of Ghana had assured the private sector that its concerns would be considered in the proposed amendment of the Borrowers and Lenders Act, 2020 (Act 1052).
“The Bank of Ghana has given us assurance that in the consideration of the amendment to the Lenders and Borrowers Act 2020, Act 1052, I think they would consider the issue of moratorium, so that it will help the private sector,” he said.
