Dr. Nii Moi Thompson, International Project Expert, Local Economic Development International Labour Organisation, on Thursday called for urgent measures to address the credit needs of local businesses, especially the small and medium enterprises in the country to stimulate growth.
He said unless the issue of affordable and accessible credit to small and medium enterprises was addressed, economic growth would always remain uneven and socially unequal and make the quest for a higher income status an elusive one.
"Indeed, any stimulus package in 2009 that ignores the dynamics and peculiar needs of local economies runs the risk of failure," Dr Thompson said in an address at the opening of a two-day conference on Financing Local Economic Development in Ghana organised by the ILO under its Ghana Decent Work Country Programme.
The conference will discuss, among others, the broad macroeconomic view from the Central Bank, the microfinance sector, the challenges of financing local infrastructure and credit to agriculture and rural women.
Dr Thompson said since SMEs make up as much as 70 percent of businesses in the country, it was important to make their funding needs the centre of public policy as the government struggled to insulate the economy against the fallout from the ongoing global financial and economic crisis.
He said experience had shown that given the appropriate support to the SME sector, most of which are in the informal economy, it could trigger employment and enhance the country's economic growth.
The informal sector accounts for as much as 80 percent of employment in the country but contributes only 20 percent of national income due to low productivity and several barriers to growth, including a lack of accessible and affordable credit.
It is in this direction that ILO is working with government and other social partners to establish an informal economy committee to bring the special needs of the national economy to the centre of public policy.
Citing results from the pilot project of Local Economic Development Initiative in Ajumako-Enyan-Essiam and Effutu-Awutu-Senya in the Central Region, Dr Thompson said the outcome had shown that given the appropriate policy environment the SMEs sector could play their role in national development.
During the project period the districts were able to establish sub-committees on Production and Gainful Employment to provide an institutional mechanism for promoting public-private partnership in local economic development, the creation of business associations and subsequent training of officials in leadership management practice and advocacy, among others.
Dr Thompson said there were plans to expand the initiative to six additional districts in the Central Region.
Dr Ernest Addison, Research Director at the Bank of Ghana, to support government policy to alleviate poverty through microfinance, the Central Bank had been creating the enabling conditions aimed to promote micro financing as a strategy for wealth creation and poverty reduction.
The Bank is also initiating reforms to remove distortions in the financial market to allow for greater engagement of the Banks and the Non-Bank Financial Institutions in SME lending.
Dr Addison said for effective sustainable financial sector, the BoG needed to maintain a stable macroeconomic environment to increase confidence in the financial system by working to reduce the inflation rate to lower levels and to achieve a stable and competitive exchange rate to reduce the uncertainties in the financial market.
Besides, government must address the issue of inappropriate institutional arrangements, poor regulatory environment and lack of coordination and collaboration as well as poor linkages.