Develop good corporate governance structure to access finance – Dr Addison to SMEs
The governor of the Bank of Ghana (BoG), Dr Ernest Addison, has charged Small and Medium-sized Enterprises (SMEs) in the country to build strong corporate governance structures.
This implies that SMEs strictly comply withy acceptable governance practices in their daily operations, have proper accounting records, inadequate financial statements and business plans.
In addition to these practices, they must efficiently deploy scarce capital, improve supply chains from product design to raw material procurement to processing and distribution, and adopt technology-driven skills development and operations.
This, Dr Addison believes, would resolve many of the challenges businesses, especially, SMEs faced in accessing finance from banks and Specialised Deposit-taking Institutions (SDIs).
He noted that poor corporate governance structure was a lesson learnt from the financial sector reforms.
He explained that poor corporate governance structure was identified as a significant factor that contributed to the failure of the defunct banks and the SDIs.
Therefore, he advised that “We need to strengthen corporate governance structures of businesses, whether small or large, because it can determine the success or failure of a business in the long-run.”
The governor said this at a business forum held by the Ghana National Chamber of Commerce and Industry (GNCCI) forum in Accra on Wednesday, June 23.
The event was on the theme “Redefining Business Success: the Path for Business Value, Resilience and Sustainability.”
Acknowledging the challenges faced by small businesses in accessing finance, he said, the difficulties faced by banks to lend to private sector due to high non-performing loans must be resolved with a change in borrower behaviour and culture.
As such, he said, “As policymakers we have focussed on policies that would improve access to finance for the business sector, but businesses will have to do their part to support policy efforts in the financial sector.”
Touching on the theme, Dr Addison explained that, post COVID-19, businesses would have to redefine their strategies, which then would reposition them for future growth.
He explained that recent developments in the economy with the challenges of COVID-19 required a broader look at the way business is done to ensure resilience and sustainability.
“Building business resilience and sustainability will be critical to the recovery process and businesses must recognise and anticipate the changing operating environment,” Dr Addison said.
Therefore, businesses must develop strategies within the context of the changes, allocate resources and create values to chart a path towards future growth.
Touching on technology, Dr Addison stated that there are opportunities from the extent of digital penetration in the country.
This, he said, must be identified by businesses by capitilising on the high level of internet and wireless subscribers.
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He explained that through digital technology banks and other financial institutions, and various businesses could create new opportunities and reach more customers, while promoting financial inclusion.
He also noted that technological innovation was an enabler of agricultural productivity, using the geographic information system (GIS) information to undertake precision farming.
Technology such as digitisation of medical records and remote diagnosis of diseases also has potential for the health services sector, the governor said.