The Bank of Ghana (BoG) has earmarked GHS2 billion to finance the activities of small and medium-scale enterprises (SMEs) in the country.

The Governor of the central bank, Dr Ernest Addison, made the revelation during the Monetary Policy Committee (MPC) meeting in Accra on Monday, 25 November 2019.

He said: “To further provide increased activity in the small and medium enterprise (SME) sector, the Bank of Ghana is setting aside 2 per cent of the banks’ primary reserve to support targeted lending to SMEs as part of the Enterprise Credit Scheme announced in the 2020 budget. These funds will be held at Bank of Ghana and will be available to banks that participate in the scheme.

“To also support and strengthen the growth of credit to the private sector, the Bank of Ghana will explore the possibility of setting a minimum loan to deposits ratio to ensure that more deposits mobilised by banks are channeled to viable private sector projects. The Bank of Ghana will hold further consultations with the banking industry to determine the impact of such a regulatory measure, and if warranted, determine the level of such a ratio and appropriate monitoring and enforcement mechanisms to promote its effectiveness.

“The Bank of Ghana is putting in measures to reinforce the existing credit infrastructure by, among other things, strengthening enforcement of the credit bureau system under proposed Regulations to be made by Parliament pursuant to the Credit Reporting Act of 2007 (Act 726), and further strengthening the collateral enforcement mechanism under a new Borrowers and Lenders Bill to improve the quality of loans made by banks as well as facilitate recovery of loans and collateral.

“The Bank of Ghana will be working closely with banks to ensure that banks do not pass on their operational inefficiencies and overhead costs to their clients. To do this, steps will be taken to align compensation with overall bank performance by linking it to clear parameters including the quality of a bank’s assets. Bank of Ghana will scrutinise compensation policies for Chief Executive Officers and key management personnel as well as Board of Directors of universal banks. To ensure transparency, banks will be required to publish Value Added Statements disclosing details of the compensation packages of key management personnel and Boards of Directors separately from total employee compensation.”

The BoG maintained the October policy rate at 16 per cent for the fifth time.