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IFC Advisory Services in Secured Lending Improve Access to Finance in Sub-Saharan Africa
July 18, 2012– Creation of a collateral registry program at the Central Bank of Ghana in March 2010 facilitated registration of more than 36,000 loans by Banks and non-bank financial institutions further resulting in almost US$2 billion in financing secured through movable property.
Accessing available financing remains a major challenge for millions of micro, small and medium enterprises (MSMEs) in Sub-Saharan Africa. One way of improving their access to finance is through well-functioning secured transactions systems that enable the market to increase the level of credit and lower the costs. Ghana was one of the first countries that embarked upon a series of reforms to improve its collateral framework encouraging banks to lend to MSMEs. After the passage of the Borrowers and Lenders Act law in Ghana in 2008, IFC Advisory Services team assisted the Bank of Ghana in setting up the registry and helped amend the existing legislation to incorporate international best practices. The program now plans to expand access to financial services for about 3000 small and medium enterprises.
“The advice we received from IFC really helped us arrive at where we are right now. As the registry grows, we expect that industries and SMEs will further grow, creating jobs and increasing the gross domestic product of the country,” says Mike Oppong-Adusah, Head of the Collateral Registry at the Bank of Ghana.
Learning from Ghana’s Best Practices IFC, in collaboration with the Bank of Ghana, and under the sponsorship of Swiss Secretariat for Economic Affairs (SECO) hosted the first regional Secured Transactions Peer to Peer Learning event in Accra, Ghana, July 3 -5, 2012, to share best practices, ideas, and expertise on the legal and institutional framework governing the creation, registration, and enforcement of security against movable assets in Africa. The over 110 participants represented government agencies, central banks, the private sector and financial institutions from 14 countries in the region.
Melchior Wagara, Deputy Minister of the Central Bank of Burundi, pointed out how the ‘lessons learned’ during the conference could potentially benefit his country. “The Ghanaian example will help us implement similar reforms. What was most interesting for me during the conference was learning what steps Burundi needs to take in creating a best practice model for reforms to regulate business activities in formal and informal sectors,” he said.
Contributed by: Sona Panajyan, Communications Officer, Access to Finance Advisory Services; Elsa Rodriguez Felipe, Operations Analyst, Access to Finance Advisory Services, and Susann Tischendorf, Junior Professional Associate, Investment Climate Advisory Services.