The Bank of Ghana (BoG) has signed a Memorandum of Understanding with the Development Bank Ghana (DBG) and the University of Ghana Business School (UGBS) to conduct research to address funding challenges of Micro, Medium and Small-scale Enterprises.

Specifically, the study will examine issues that go beyond traditional banking services and explore alternative financing mechanisms as well as strategies to address MSMEs' unique needs and challenges of access to finance.

The nationwide study titled "The MSME Innovative Financing Project," being conducted at the UGBS, will be completed by the end of April.

The objective of the study is to provide fresh empirical evidence on the financing gap MSMEs are facing and explore innovative schemes that can be deployed by financial institutions to drive the development of the MSMEs sector.

Speaking at the signing ceremony for the commencement of the project, the First Deputy Governor of the BoG, Dr. Maxwell Opoku-Afari, said the study would promote understanding of and also provide anecdotal evidence on the financing challenges MSMEs face in Ghana and the funding gap that existed and recommend new and innovative ways to close such gaps.

"At the end of the day, this study will provide us with reliable documents which will inform policy that will encourage innovation in financing the critical mass of the economy, the MSMEs and by that create employment and spur economic growth," Dr Opoku-Afari stated.

He said one of the surest ways of delivering credit to MSMEs was by digitalisation to help address the myriad of challenges that had undermined access to credit by MSMEs, especially the lack of collateral.

The First Deputy Governor said credit and credit delivery were critical to the development of every economy, particularly developing economies such as Ghana.

He said the BoG was not only concerned with price stability but also economic growth through credit expansion to the private sector, hence the study.

The Dean of the UGBS, Professor Justice Bawole, in his remarks, said his outfit was excited to be part of the project, adding that it was in line with the research mandates of the School.

Prof Bawole expressed the hope that the collaborative programme would come out with practical solutions to address the challenges facing MSMEs.

The Chief Economist and Head of Research DBG, Dr Kwabena Opuni Frimpong, in his remarks, said the collaboration among the regulator, private sector and academia to come together to conduct a study into the challenges facing MSMEs and come up with recommendations to address them was encouraging.

The Principal Investigator of the Project, Professor Eric Osei-Abbey, said the study had become necessary in view of the role MSMEs played in job creation and promoting economic growth, stressing that MSMEs in Ghana created about 90 per cent of jobs and contributed about 70 per cent to the country's Gross Domestic Product.

"When we talk about socio-economic development, there's no way we can transform our economies without transforming the micro small enterprises," he said.

He said the study, which would cover areas such as agriculture, industry, services and manufacturing, was to examine and understand the extent to which the recent macroeconomic conditions and tighter financing conditions emanating from the banking sector clean-up and the Domestic Debt Exchange Programme had affected MSMEs' access to finance.

Prof Osei-Assibey said the research would ascertain the real and perceived risks associated with financing MSMEs, examine the drivers of Fintech adoption of MSMEs financing in Ghana and investigate innovative financing arrangements explored by MSMEs in the presence of existing constraints.

He said the future of the SMES sector was bright, with digital transformation and innovative financing options emerging as key growth drivers.