The Bank of Ghana (BoG) has encouraged businesses, particularly small and medium-sized enterprises (SMEs), to utilize the country's collateral registration system. This initiative aims to improve access to credit and facilitate better lending terms with financial institutions. According to Mr. Alexander Koomson, Head of the Collateral Registry Department at BoG, limited awareness of the country's credit infrastructure is a significant constraint. The BoG organized a sensitisation programme in Kumasi to address this issue.
The programme focused on the "Borrowers and Lenders Act, 2020 (Act 1052)" and the operations of the Collateral Registry Department. It brought together business owners, entrepreneurs, traders, manufacturers, and representatives from the Association of Ghana Industries (AGI) and the Ghana National Chamber of Commerce and Industry (GNCCI). Mr. Koomson emphasized that the enactment of Act 1052 and the operationalization of the Collateral Registry Department aim to address longstanding challenges in the credit market.
These challenges include inadequate acceptable collateral, information asymmetry, and weaknesses in enforcing security interests. Mr. Koomson noted that limited awareness of the credit infrastructure system and its processes could hinder the intended purpose of this regime. The BoG is committed to continuous stakeholder engagement and public education to strengthen trust and confidence in the credit system. Credit is critical to business growth, supporting expansion, strengthening value chains, and contributing to job creation and inclusive industrial growth.
However, access to credit has historically been constrained by the inability of businesses to provide acceptable collateral and deficiencies in secured lending systems. The Collateral Registry Department, established following the passage of Act 1052, provides a framework for registering security interests in movable and other eligible assets. This enables businesses to use their assets to support borrowing, including equipment, inventory, and receivables that may otherwise remain underutilized when seeking financing.
The Ashanti Regional Chairperson of the GNCCI, Mr. Edward Yaw Afriyie, highlighted the importance of the sensitisation programme. Many businesses remain unclear about their rights and obligations when dealing with lenders. Greater knowledge of the law would enable entrepreneurs to better understand lending agreements, collateral requirements, and available mechanisms under the Act. The timing of the engagement is significant, given developments in monetary policy and lending conditions.
Mr. William Agyei-Manu, Agricultural Sector Chairman of the AGI, encouraged entrepreneurs to pay close attention to the technical presentations on Act 1052 and the Collateral Registry. He noted that access to funding can be particularly challenging for SMEs seeking to expand into new markets. Many businesses own assets but face difficulties using them as collateral due to incomplete documentation, land-title issues, or other registration challenges.
Mr. Agyei-Manu urged businesses to properly document and register their assets, emphasizing that financial literacy and knowledge of the credit system are increasingly important for improving access to finance. The BoG's initiative aims to support business growth and expansion by providing easier access to credit. By leveraging the collateral registration system, businesses can unlock their assets and negotiate better lending terms with financial institutions.
Key points
- The Bank of Ghana is committed to continuous stakeholder engagement and public education to strengthen trust and confidence in the credit system.
- The Collateral Registry Department provides a framework for registering security interests in movable and other eligible assets.
- Limited awareness of the country's credit infrastructure is a significant constraint for businesses seeking to access credit.
