Editorial: Commercial banks should employ risk-sharing tools to unlock SME credit

Lenders have been urged to make greater use of risk-sharing mechanisms in expanding credit to small- and medium-sized enterprises.

Governor Johnson Pandit Asiama cited risk-sharing models such as partial credit guarantees to reduce the reluctance of banks in lending to SMEs, which often lack collateral.

Although SMEs account for about 90 percent of businesses worldwide and provide more than half of global employment, in Ghana they remain underserved despite their central role in the economy.

In emerging markets, they contribute up to 40 percent of GDP yet face a global financing gap of about US$8trillion, Asiama noted. “Our banks must move beyond collateral-based lending,” he said. “They should shift toward cash-flow lending, purchase-order finance and supply-chain finance as alternatives that have worked in other regions.”

Governor said development finance institutions – including Afreximbank and the African Development Bank – are already providing blended finance and trade lines that can be scaled up.

He argued that risk-sharing must be combined with other innovative financing approaches. Dr. Asiama also cited Rwanda, where well-governed partial credit guarantees unlock SME lending and drive job creation.

He said tools like GIRSAL must be more actively deployed. The Ghana Incentive-Based Risk-Sharing System for Agricultural Lending, known as GIRSAL, was introduced to encourage commercial banks to increase credit for agribusinesses.

He added that Ghanaian banks can structure financing around the creditworthiness of anchor buyers in sectors such as cocoa, agro-processing and light manufacturing. He cited Bangladesh’s garment sector as an example where such arrangements enabled rapid expansion.

Beyond credit, banks are encouraged to provide advisory support to help SMEs meet sustainability and export requirements.

“SMEs are the engines of jobs, innovation and inclusive growth,” Dr. Asiama said. “Risk-sharing tools and innovative lending models are not optional, they are necessary to unlock their potential.”

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