Abandon collateral-only lending to unlock SME growth -Banks told

Bank of Ghana Governor Dr. Johnson P. Asiama has urged commercial banks to drop collateral-only lending models, insisting they are choking SME growth and competitiveness.

“Finance remains the oxygen of enterprise,” Dr. Asiama said at a workshop organized by the Ghana Association of Banks in Accra.

“Many SMEs lack fixed assets, but models like cash-flow lending, purchase-order finance, and supply-chain finance have proven effective elsewhere. Ghanaian banks can do the same.”

He stressed that Ghana must adopt risk-sharing mechanisms to free up affordable credit.

“In Rwanda, well-governed partial credit guarantees unlocked SME lending and drove job creation. In Ghana, tools like GIRSAL must be more actively deployed, with stronger transparency and governance to build lender confidence.”

Beyond credit, he urged banks to serve as partners in building SME capacity. “Many SMEs struggle to meet export or sustainability standards. Banks can bundle financing with advisory services, supporting clients in certification, traceability, and carbon reporting,” he added.

SMEs account for about 90 percent of Ghanaian businesses but remain underrepresented in exports.

The World Bank and IFC estimate a global SME financing gap of $8 trillion.

Dr. Asiama also cited new rules targeting large cash withdrawals and over-the-counter deals.

“Our updated guidelines are shifting flows into formal channels. This protects the market’s integrity and ensures FX is available for genuine trade and productive uses,” he explained.

As of early September 2025, 1 U.S. dollar trades for about GH¢12.20. That marks a slide from value levels earlier in the year.

Business and Foreign Exchange market analysts warn that the cedi may weaken further due to persistent strong demand for foreign currency by corporates, limited supply in the FX market, and low levels of intervention by the Bank of Ghana.

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Meanwhile, Ghana’s external reserves improved in 2025, strengthening the cedi. But SMEs, especially in export and import sectors, have long complained of unpredictable exchange rates hurting competitiveness.