During a one-week High-Level Joint Learning Programme, co-hosted by Bank Negara Malaysia (BNM) and AFI in Kuala Lumpur last month, we sat down with Elsie Addo Awadzi, Deputy Governor of Bank of Ghana (BoG) to gain her perspective on financial inclusion and the pillars of sustainable SME finance.

AFI: In your opinion, what is the best way to make SME finance sustainable in Ghana?

Deputy Governor Elsie Addo Awadzi, Ghana: There are three key lessons that stand out for me. The first is the role of regulatory policy. As regulators of banks and other financial institutions, we will need to think about how regulation could better promote access to a variety of financial products and services suitable for SMEs.

Malaysia promotes SME finance through a holistic and pragmatic enabling framework; this does not need to compromise on regulatory and supervisory standards. We need strong and resilient financial institutions to deliver SME finance on a sustainable basis.

AFI: Regulation is indeed a key factor. What are other ways in making SME finance sustainable in Ghana?

Deputy Governor Elsie Addo Awadzi, Ghana: Statistics play an important role. Effective policies to promote SME finance will need to be evidence-based, drawing on high quality statistics on SMEs, the business environment within which they operate, and how SMEs are impacted by policy and regulatory measures.

Lastly, policy coordination is critical to building an entire ecosystem for supporting sustainable SME finance. A number of different stakeholder groups — both public and private — will need to work together to develop smart policy interventions that will help to address existing weaknesses in the SME market. 

AFI: Those are some good lessons to take note for sustainable SME finance. Can SMEs play a role in slashing the gender gap?

Deputy Governor Elsie Addo Awadzi, Ghana: Yes, they can. For starters, SMEs in most developing economies are the bedrock of socio-economic development, contributing significantly to GDP, job creation and improved livelihoods. In Ghana, SMEs form about 92 percent of all registered businesses.

AFI: That is a significant percentage.

Deputy Governor Elsie Addo Awadzi, Ghana: Absolutely. As drivers of growth, SMEs have a unique role to play in promoting equal opportunities for women in formal employment through workplace policies that support women. This is not only ethical. It also makes business sense. There is enough evidence to show that women make significant contributions to the growth and competitiveness of businesses, in their roles as shareholders, board members, and employees.

The truth is, there are many women already playing key roles in SMEs in Ghana. There is the need to further support them to fully contribute to these businesses as they pave the way for other women to follow in their footsteps.

AFI: AFI turns 10 this year! When you look back at the past 10 years, what do you think has been the biggest challenge?

Deputy Governor Elsie Addo Awadzi, Ghana: Congratulations to AFI on its 10th anniversary! Indeed, AFI has accomplished a lot in its decade of existence. We at the Bank of Ghana are proud to have been associated with AFI over the years as a member organization, together exploring new ways to advance the financial inclusion agenda. Interestingly, it has also been ten years since the global financial crisis.

AFI: Indeed it has. The financial sector has been building resilience over the years.

Deputy Governor Elsie Addo Awadzi, Ghana: While financial sector regulators around the world have, and quite rightly so, focused largely on strengthening their regulatory frameworks to avert another such crisis, it is gratifying to note that regulation in much of the developing world has also made room for financial innovation and inclusion. When carefully designed, regulatory frameworks can promote financial stability on the one hand, while ensuring that businesses, households, and individuals at the bottom of the pyramid gain access to critical financial services and products through financial innovation.

AFI: What do you see as the most significant financial inclusion accomplishments by your institution and the network?

Deputy Governor Elsie Addo Awadzi, Ghana: The Bank of Ghana has been at the forefront of promoting financial inclusion and innovation in Ghana. One significant initiative has been the opening up of the electronic money space to non-banks and FinTech partnering banks. This has led to increased access to financial services and products for previously underserved groups.

There are currently 24 million mobile money accounts in Ghana — about twice the number of bank accounts — accessing savings, investments, insurance and pension products and services using their mobile money accounts. Ghana’s automated collateral registry has also become a key part of the credit market infrastructure, supporting bank’s credit delivery to borrowers. 

The Bank of Ghana will continue to promote financial inclusion by encouraging financial services providers to provide products and services suitable for SMEs, through sustainable credit practices and innovative payments services.

AFI: We look forward to seeing Bank of Ghana flourish in advancing financial inclusion in the coming years.

Learn more about the role financial regulators play in promoting access to financing for MSMEs.