The Head of Trading, Global Markets at Absa Bank Ghana Limited, Andrews Akoto, says declining interest rates are encouraging banks to increase lending to small and medium-sized enterprises (SMEs), creating opportunities for business expansion and economic growth.
According to him, the current low-interest-rate environment is highly accommodative and is expected to drive significant growth in credit as banks position themselves to expand their loan portfolios.
Speaking on Channel One TV’s Quarterly Economic Review on the mid-year performance of the Ghanaian economy on Thursday, July 9, Akoto said banks are already preparing to extend more loans to businesses and individuals.
“Essentially, with the lower interest rates, this is very accommodative, and so there will be a lot of loan growth that the banks are postured for. You would see the banks out there actually trying to write more loans,” he stated.
He noted that SMEs are likely to be among the key beneficiaries of the increased lending activity but stressed that access to finance alone will not be enough to ensure their growth.
Akoto explained that banks will need to provide guidance and capacity-building support to help smaller businesses meet lending requirements and position themselves for long-term growth.
“There will be a lot of hand-holding where you want to build the capacity of SMEs to be able to access these kinds of loans, or maybe grow from that small-scale enterprise to be able to access something like the alternative markets of the stock exchange,” he said.
He added that strengthening SMEs through financing and technical support could help them transition from small-scale operations to larger businesses capable of accessing alternative funding sources, including the Ghana Stock Exchange’s alternative market.
