The President of Ghana Nana AKufo-Addo, today, launched GH¢600m (US$103.25m) stimulus package for the Micro, Small and Medium Enterprises to cushion the impact of the Coronavirus Pandemic.
Businesses operating in the nine selected sectors are to benefit from the stimulus fund. The industries include healthcare and pharmaceutical, manufacturing, agric and agri-business, water and sanitation, tourism and hospitality, education, textiles and garments, commerce or trade, and service.
These sectors have been established to have been significantly negatively impacted by the lockdowns and restriction associated with the fight against the virus. They were therefore identified as beneficiaries under the modalities of the Coronavirus Alleviation Programme (CAP) Business
The fund is categorized in Anidaso and Adom (special) loans, ranging between GHȼ1,000 (US$172.08) and GHȼ150,000 (US$25812.22) with five per cent interest rates.
One of the major criteria to be eligible for the stimulus package that will be disbursed as from May 25, is that applicant should be able to present a proof of membership of a recognized association, trade group or registration with the National Board for Small Scale Industries NBSSI.
Among other criteria is that applicants are expected to prove with verifiable evidence of business activities gravely impacted by the COVID-19 pandemic.
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According to the Deputy Minister of Trade and Industry, Mr Robert Ahomka-Lindsay, more than 80 per cent of all registered businesses fall in the category of MSMEs.
Ghanaian government have been able to respond to the COVID-19 pandemic with significant fiscal and monetary policies as presented by the International Monetary Fund, IMF in their global Policies Responses to COVID-19 report.
In addition to the above, IMF reported that the government plans cutting spending in goods and services, transfers, and capital investment (also reflecting the lower absorption capacity of the economy due to the pandemic), for a total of at least GHc 1.1 billion (0.3 percent of GDP), to compensate for larger spending related to the COVID-19 crisis.
Also, the government has agreed with investors to postpone interest payment on non-marketable domestic bonds held by public institutions to fund the financial sector clean-up for about GHc 1.2 billion (0.3 percent of GDP).
The Monetary Policy Committee (MPC), on March 18, cut the policy rate by 150 basis points to 14.5 percent.
The Committee also announced several measures to mitigate the impact of the pandemic shock, including lowering the primary reserve requirement from 10 to 8 percent, lowering the capital conservation buffer from 3 to 1.5 percent, revising provisioning and classification rules for specific loan categories, and steps to facilitate and lower the cost of mobile payments.
The COVID-19 pandemic, like rest of the world, is expected to impact on the Ghanaian economy in a significant way.
Ghana’s estimated GDP growth is set to plummet from a target of 6.8% to about 2.6% in 2020, the lowest real GDP growth in 37 years
Sources: Graphic online, IMF and Deloitte