3i Africa Summit: Digitalization key to SME credit access and inclusive growth

Dr. Maxwell Opoku-Afari, the First Deputy Governor of the Bank of Ghana

Small and Medium Enterprises (SMEs) often grapple with accessing credit due to the challenge of establishing trust and a solid track record, Dr. Maxwell Opoku-Afari, the First Deputy Governor of the Bank of Ghana has highlighted.

 He emphasized that SMEs represent the pivotal constraint to economic growth, and by addressing this constraint through collaborative efforts across stakeholders, including innovators and policymakers, the potential for broad-based, inclusive, and shared growth becomes tangible.

Dr. Opoku-Afari underscored the pivotal role of digitalization in overcoming this challenge, citing the collaboration between the central banks of Ghana and Singapore in establishing the Financial Trust Corridor (FTC). This initiative aims to compile and verify data between the two central banks, creating a comprehensive database of SMEs that meet specific criteria, thereby fostering trust and facilitating financial transactions.

Speaking at the 3i Africa Summit on ‘Africa’s Digital Trade Highway: Unlocking SME Growth through Technology,’ Dr. Opoku-Afari outlined plans to leverage digitalization further through the introduction of the Universal Trusted Credential (UTC). This innovative approach utilizes digital footprints to assess the willingness and capability of SMEs to meet financial obligations, addressing the core issue of trust and enabling access to credit without the need for tangible collateral.

Highlighting the significance of establishing a credible track record for SMEs, Dr. Opoku-Afari emphasized the issuance of well-defined, universally accepted credentials as a means to overcome this obstacle. Ghana stands as a pioneering example, having tested the UTC within a sandbox environment under the central bank’s supervision. Initial outcomes have been encouraging, with minimal non-performing loans (NPLs) and heightened confidence from SMEs and financial institutions alike.

Furthermore, Dr. Opoku-Afari introduced the Digital Enforcement of Funds Transfer (DEFT) initiative, aimed at enhancing accountability in resource allocation. By integrating purpose-bound money with the e-cedi platform, funds allocated to a firm are only accessible for their designated purpose, ensuring efficient resource utilization and fostering trust in the financial system.

This initiative, currently undergoing sandbox testing, holds the promise of revolutionizing business practices, reinforcing trust, and providing SMEs with the necessary access to credit. Given the substantial contribution of SMEs to economic activity, unlocking their potential is pivotal in driving inclusive and sustainable growth, concluded Dr. Opoku-Afari.

By Eugene Davis

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