Finance Minister Dr. Cassiel Ato Forson has called on commercial banks in Ghana to increase lending to productive sectors of the economy as the government takes steps to reduce its dependence on domestic borrowing.
Speaking on behalf of the Finance Minister, Louis Kwame Amo, Director of the Financial Sector Division at the Ministry of Finance, urged financial institutions to provide more credit to businesses involved in manufacturing, exports, agriculture, technology and job creation.
He said Ghana’s focus should now move beyond macroeconomic stability towards building a more productive, competitive and export-driven economy supported increasingly by private sector investment.
“Stability itself is not the destination. Stability is the platform. Transformation is the destination,” he said.
Mr Amo was speaking at the commissioning of the new Absa Bank Ghana head office on Friday, September 25.
Government Seeks Greater Private Sector Financing
According to the Ministry of Finance, the call for increased bank lending forms part of the government’s New Economy programme, which seeks to consolidate the gains made through macroeconomic stabilisation while strengthening key productive sectors.
The programme places greater emphasis on expanding economic production, improving competitiveness, increasing exports and encouraging private investment.
Mr Amo said the Ghana banking sector will be critical to achieving these objectives as government gradually reduces its participation in the domestic financing market.
He explained that reducing government demand for domestic funds should create additional space for commercial banks to channel more financing towards private businesses.
Banks Urged to Finance Manufacturing and Export Businesses
Dr Ato Forson therefore encouraged banks to redirect a larger share of their lending towards businesses capable of contributing directly to Ghana’s economic growth.
Priority areas identified include manufacturing, export-oriented businesses, agricultural processing, technology and enterprises that create employment opportunities.
The Finance Minister said Ghana needs stronger access to affordable business financing to help companies expand production, process local raw materials and compete in international markets.
“We need more credit to go to businesses that produce, businesses that export, businesses that manufacture, businesses that employ young people, businesses that process what we grow here in Ghana, businesses investing in technology and businesses building Ghana’s new economy,” he said.
Bank Credit Seen as Key to Economic Transformation
The government’s position highlights the important role of private sector credit in Ghana’s economic transformation.
Greater access to financing could enable businesses to expand their operations, purchase equipment, increase production capacity and create more jobs.
Supporting agricultural processing could also help businesses add value to locally produced commodities before they reach domestic or international markets.
Meanwhile, increased financing for technology-driven businesses could contribute to innovation and productivity across different sectors of the Ghanaian economy.
Government Reduces Reliance on Domestic Borrowing
The Finance Ministry’s call comes as government works to reduce its reliance on domestic financing.
A lower government footprint in the domestic credit market is expected to provide greater opportunities for banks to finance private-sector businesses and productive economic activities.
The government wants financial institutions to play a stronger role in supporting businesses that contribute to economic growth, employment creation, industrial development and export expansion.
The approach forms part of efforts to transform Ghana from an economy focused primarily on macroeconomic stabilisation into one driven increasingly by production, private investment, manufacturing, exports and innovation.
Ghana Banking Sector and Economic Growth
The Finance Ministry has consequently urged banks and other financial institutions to align their lending strategies with the country’s broader economic transformation agenda.
By directing more capital towards productive businesses, the banking sector can support increased domestic production, strengthen Ghanaian companies and create opportunities for sustainable job creation.
The government maintains that macroeconomic stability should serve as the foundation for a broader transformation of Ghana’s economy, with private sector investment and productive bank lending playing a central role.
Source: newsthemegh.com