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Release funds to SMEs - Economist urges govt

By: Charles Benoni Okine
Mr Alan Kyerematen, Minister of Trade and Industry
Mr Alan Kyerematen, Minister of Trade and Industry

The government has been urged to take urgent steps to disburse the GHc600 million it pledged to small and medium-sized enterprises (SMEs) to help reduce the impact of the restrictions imposed on movements as a result of the outbreak of COVID-19 in the country.

The Director of the Institute of Economic, Social and Statistical Research (ISSER), Professor Peter Quartey, who made the call in Accra in an interview on April 23, said the “longer it takes for the funds to be released, the more the proposed beneficiaries will suffer the impact from the restrictions imposed by the government as a result of the pandemic”.

Among other things, people are supposed to mandatorily observe social distancing wherever they are, a directive which is making it difficult for some institutions, including SMEs, to operate optimally.

His call comes at a time when associations of SMEs and individual players particularly in the pharmaceutical industry are clamouring for the immediate disbursement of the funds pledged by the government to support them. This will enable them to either start or scale up the production of the necessary Personal Protective Equipment (PPE) for the frontline workers and health intuitions, as well as manage to settle the allowances of their workers affected by the practice of social distancing.

Prof. Quartey said, “I hear the money will be disbursed somewhere in May but we are not sure. Even so, I think it is not clear when exactly the disbursement will start and that alone is disturbing in view of what the funds are intended for.

“We must note that the various procedures applicants will have to go through to apply for the funds and the period it will take for the processing of documents to be completed can create more problems and hardship for them or even erode the value of the amount given. This is why I pray we do this early enough.”

According to him, SMEs were facing dire times and noted that “the earlier the better for them to cushion them against the shocks from the disease”.

President’s pledge
In his fifth broadcast to the nation on the fight against the coronavirus pandemic, President Akufo-Addo said SMEs would soon enjoy GH₵600 million soft loans to cushion them against the devastating effects of the coronavirus lockdown.

Although the lockdown has been lifted, there are still some restrictions which are affecting the normal flow of work, hence businesses are still feeling the impact of the novel disease. These include their inability to operate at full capacity, reduction in staff strength as a result of the social distancing directive, among other things. Again, depending on the goods produced, people are not patronising as they used to do in the past.

For instance in the services sector, many people are still home because of the ban on social gatherings among other things. Hotels and tourism sites are all not functioning or are operating at a maximum of between 20 and 30 per cent.

"SMEs will soon enjoy GH₵600 million soft loans to cushion them against the devastating effects of the coronavirus lockdown."

Details of loan
The loan is expected to have a one-year moratorium and a two-year repayment period. The government, in collaboration with the National Board for Small Scale Industries (NBSSI), business and trade associations and selected commercial and rural banks, is expected to roll out a soft loan scheme up to a total of GH₵600 million.

The President’s address was on the back of the agitations and SOS calls by the Ghana Union of Traders Association (GUTA) for shop owners to consider suspending rent payment until the coronavirus pandemic was brought to a halt.