Dynamic and promising economy
Ghana has a population of 24 million people and is politically stable. The country has benefited from macroeconomic reforms in the last years that improved its economic performances: the Gross Domestic Product (GDP) grew by 7,2% in 2008 and 4,5% in 2009 and prospects appear promising for the coming years, even if the international crisis slowed down the perspective of growth. The International Monetary Fund (IMF) forecasts growth rates of 5% and 8,5% in 2010 and 2011 respectively.
Inflation remains an issue although the government has been implementing a tight monetary policy. Inflation rates were 16,5% in 2008 and 19,3% in 2009, but according to the IMF forecasts, inflation should drop to 10,1% in 2010 and 8,4% in 2011.
Despite the recent economic expansion, and the strong poverty reduction strategy put in place, socio-economic and regional disparities remain a critical issue. In 2007, 28% of the Ghanaian population still lived under the poverty line, and strong urban-rural disparities were registered. Ghana ranks 138 out of 177 countries on the Human Development Index.
Strong MSME sector in need of adequate financial services
Micro, small and medium enterprises play a vital role in the Ghanaian economy since they generate 40% of Gross National Income (GNI). Potential demand from urban MSMEs, especially concerning credit facilities, but also for current and savings accounts, is still unmet:
Ghanaian banks are clearly focused on large companies and wage earners. Although most of the commercial banks declare being interested in the SME market for the coming years, SME credit activity is still considered as too risky. The effective pricing conditions offered by the banks for credit are very high as well as the costs for account maintenance and the remuneration of the saving accounts particularly low.
Microfinance sector is diversified, with 5 types of stakeholders, each with their own specificities: the Rural Community Banks (RCB), the Savings and Loan Companies (S&Ls), the Credit Unions (CU), the financial NGOs, and the ‘”susu” collectors. However, according to Advans SA’s 2007 market survey, only 18% of the 350,000 potential borrowers in the 5 main cities have ever taken a loan from a formal financial institution. Despite a highly competitive banking environment, the actual costs of banking and microfinance services remain high. Advans Ghana objective is to offer affordable and high quality financial services to MSMEs in Ghana.