The Bank of Ghana (BoG) has facilitated GH¢8million in collateral-free loans to 20 small and medium enterprises (SMEs) through the Ghana Integrated Financial Ecosystem (GIFE) initiative.

This development was revealed by Dr. Ernest Addison, Bank of Ghana Governor, in his remarks at the SME Growth and Opportunity Summit.

The GIFE initiative, launched in June 2022, is part of the broader Business Sans Borders (BSB) project – a collaboration between the Bank of Ghana and Monetary Authority of Singapore (MAS). GIFE is a comprehensive financial development programme that provides SMEs with financial and digital literacy training, as well as offers the opportunity for SMEs to obtain trusted digital credentials – thus enhancing access to financial services and cross-border trade connectivity.

A key feature of the GIFE initiative is its innovative ‘intent-to-pay’ credit assessment model. This model utilises digitally verified SME information to facilitate credit assessment without relying solely on traditional balance sheet strength or collateral requirements.

Dr. Addison explained: “It relies on Application Programming Interface (API) integration with key government and private sector data sources to perform independent data verification for the development of trusted digital credentials”.

The SMEs landscape remains attractive in Ghana. Of an estimated 2.1 million businesses in the MSME sector, about 1.7 million – representing some 81 percent of the sector – is classified in the micro enterprises category. About 15 percent is categorised as small enterprise and 4 percent is expressed as medium enterprise companies.

The success of this model is evident in the GH¢8million of collateral-free loans already disbursed to 20 SMEs. This achievement is particularly noteworthy given the challenging economic environment that Ghana has faced in recent years, including impacts of the COVID-19 pandemic and global economic shocks.

Dr. Addison expressed optimism about the initiative’s future, stating: “As the initiative expands, more partner financial institutions are expected to join and offer additional credit facilities to Ghanaian SMEs. While still in its early stages, the GIFE initiative shows a promising potential to significantly alleviate SME financing challenges”.

The Governor emphasised collaborative efforts between regulators and the private sector, leveraging innovative FinTech solutions to overcome financing challenges for SMEs. He noted that the initial success of GIFE has catalysed evolution of the Universal Trusted Credential (UTC) concept, now adopted by the United Nations Development Programme (UNDP).

“As advocates for the UTC concept, efforts are underway to develop UTC standards that ensure international interoperability and incorporate key global credentials such as Legal Entity Identifiers or LEI numbers,” Dr. Addison said. “This advancement is poised to significantly improve local SMEs’ access to cross-border trade and financing opportunities.”

The Bank’s efforts to support SMEs extend beyond the GIFE initiative. Dr. Addison also mentioned the SOLV digital marketplace, promoted by Standard Chartered Bank, which is currently being tested in the BoG’s regulatory sandbox. SOLV aims to provide SMEs with access to a range of financial services, professional business services and eCommerce platforms.

Acknowledging the fragmented nature of SME initiatives, Dr. Addison called for enhanced collaboration among stakeholders. “By fostering such coordination, Ghana can create a more cohesive and supportive environment for SMEs to thrive, contributing significantly to sustainable economic development and job creation,” he stated.