“Leaving No One Behind In Post-COVID Ghanaian Economy” – Second Deputy Governor, BoG
Mrs. Elsie Addo Awadzi, Second Deputy Governor of BoG
The Second Deputy Governor of the Bank of Ghana (BoG), Mrs. Elsie Addo Awadzi has suggested ways to support Micro, Small and Medium-sized Enterprises (MSMEs) and position them on the journey to economic recovery post-COVID.
According to her, a few critical issues need to be addressed to ensure the strategic positioning of the MSME sector will help in turning the disruptions in global supply chains to a national advantage.
She made these recommendations at a forum organized by the Engine Business Network (EBN) while speaking on the theme “MSME Manufacturing Capabilities, Responding To COVID-19 And Opportunities Beyond”.
Mrs. Awadzi believes that in ensuring that no one is left behind on the journey to post-COVID recovery, her suggestions could be considered to “building a self-reliant and reliant economy”.
The Second Deputy Governor of the BoG maintains that to support MSMEs as a country, we need to “re-tool and re-equip the MSME sector to leverage technology for more innovation. We need to increase access to finance for MSMEs. We need critical public-private sector investments in key infrastructure over the medium-term to increase the manufacturing capacity of our economy. We need a renewed focus on equitable and inclusive growth to ensure that the MSME sector, and in particular, women and youth entrepreneurs are not left behind.”
MSMEs over the years have played and continue to play a pivotal role in Ghana’s socio-economic development. This sector does so by producing critical goods and services, creating jobs, and helping to reduce poverty through its remarkable contribution to economic growth.
It is estimated that MSMEs represent about 85 percent of Ghana’s private sector and contribute about 70 percent of annual GDP. In terms of employment, MSMEs account for an estimated 85 percent of manufacturing jobs in the country.
According to the World Bank, one-third of the MSME sector is estimated to be owned and controlled by women. This is one of the few sectors where women and youth dominate, take advantage of opportunities and harness their economic potential.
Meanwhile, the sector is faced with severe constraints that stifle their growth. A World Bank in 2019 estimated that MSMEs in Ghana experience financing gap of about 13 per cent of the Gross Domestic Product (GDP).
Mrs. Awadzi while addressing her audience via a virtual conference used the opportunity to reiterate some of the measures the central bank has put in place to cushion MSMEs.
“The Bank of Ghana has also taken a number of measures to help alleviate the economic pain from the pandemic. By reducing its monetary policy rate from 16 percent to 14.5 percent in March 2020 and providing regulatory reliefs to release capital and liquidity to banks and specialised deposit-taking institutions (SDIs), the Bank of Ghana has provided a major boost to these financial institutions to provide economic relief to their customers, particularly those in the MSME sector,” she highlighted.
She also touched on government’s intervention following the advent of the novel coronavirus.
“In Ghana, the impact of the pandemic on businesses, Government revenues and expenditures, and on inflation, have compounded the problems of the MSME sector. Many countries around the world have responded to the economic impact of the pandemic with policy measures to cushion the impacts on small businesses. Similarly, the Government of Ghana has provided some GH¢600 million through the NBSSI to cushion MSMEs against the devastating effects of the pandemic. Through partnerships with banks and other financial institutions, this amount could potentially increase to GH¢1 billion to provide even more support to this sector. Other interventions by Government, including the absorption of electricity and water bills of consumers, have also helped to support the MSME sector.”