A private equity and international business consultant, Dr Richmond Odartey Lamptey, has urged commercial banks to establish impact investment funds to support Small and Medium Enterprises (SMEs).

He said this was important because Ghana’s Domestic Debt Exchange Programme (DDEP) had affected the ability of commercial banks to provide financial support to businesses due to some losses incurred due to the DDEP.

Thus, Dr Lamptey said it had become important for commercial banks to explore innovative capital financing means, including impact investment funds to shore up liquidity to be better placed to resource SMEs which are the engine of economic growth.

Such funds, he stated, came with investment capital, technical assistance for both banks and businesses and support for the achievement of both financial and developmental goals.

The Consultant was speaking to the Ghana News Agency at a stakeholder engagement and dissemination conference in Accra.

The conference discussed ways of restoring commercial banks’ liquidity for SME financing post-DDEP.

“You go to the bank nowadays as an SME and they tell you that we are sorry we cannot help you. Some even tell you that we are giving our money to importers,” a women-led SME operator lamented during the conference.

It was against the background that Dr Lamptey, who is also an Entrepreneurship and Strategy Lecturer at the University of Greenwich, London, advised commercial banks to urgently establish impact investment units dedicated to SMEs.

“There must be a paradigm shift in how commercial banks conduct financial intermediation – not just collect deposits and obtain the necessary returns. They should proactively set up impact investment funds, seek additional funding, and invest them to finance SMEs,” he said.

Dr Lamptey noted that in recent years, developed economies, and multilateral and development finance institutions are channelling such capital to developing countries through commercial banks and other financial intermediaries to fund businesses including SMEs.

“This is a window of opportunity for commercial banks in Ghana to establish impact investment units and seek additional funds to ensure that SMEs are empowered to generate growth in the economy,” he said.

Dr Lamptey was confident that Ghana’s SME sector would be an engine of economic stability and sustainable growth should commercial banks explore utilising impact investment funds.

He recommended that banks that access impact investment funds should consider areas of developmental needs of Ghana including agribusiness, health, education, and digital infrastructure development.

The reporting guidelines and involvement of the fund givers, he said, would ensure that the monies are given to SMEs who need it and can sustain their business, creating employment and contributing to economic growth.

Mr Clifford Duke Mettle, Chairman, the International Chamber of Commerce-Ghana also indicated that the DDEP had made some banks incur losses, resulting in the reduction of loans particularly to the SME sector,

“For 2022 alone, almost GHS6.1 billion loss was incurred by banks, and this is a serious problem to the balance sheet of banks post-DDEP, hence, the need to explore ways to restore commercial banks liquidity and ability to support SMEs.

“All the commercial banks should intentionally put impact investment funds in place because they have the advantage – the interest rate is lower, and help in the sustainability of businesses,” he said.

Mr Mettle said reliefs by the Bank of Ghana, the establishment of the GHS15 billion Financial Stability Fund and the Development Bank Ghana seeing the need to support commercial banks to shore up liquidity would be helpful going forward.

Impact investment makes commercial banks become more finance-oriented, have de-risking opportunities, and focus on a dual mission of financial returns and social and developmental impact.

The funds, which are noted for yielding positive financial returns and developmental impacts, are being flown to developing countries to support the achievement of the United Nations (UN) Sustainable Development Goals and SMEs.