Accessibility to finance for non traditional exports in Ghana
Access to finance has been identified as a dominant constraint facing Ghanaian exporters, especially in Non Traditional Exports (NTEs). Available evidence indicate that commercial banks in developing economies would rather invest their funds in less risky ventures than to place such funds in the development of the export sector (Asiedu-Appiah, E. 2005). This qualitative study seeks to find out the difficulties NTEs sector encounter in accessing export finance to support their businesses. The study is a non-experimental research using primary and secondary data. Using convenience sampling, 60 exporters were selected for the study. Their responses to questionnaire and interviews were compiled, analysed and evaluated using techniques such as tabulation and appropriate statistical graphs. Results from the study suggest that collateral, financial statement and cash flow are critical for financial institutions in extending credit to small non-traditional exporters. The study reveal high risk (real or perceived) associated with bank lending to NTEs likewise constrain access to finance. Banks lack the appropriate instruments for managing loans to NTEs. Most important, banks typically lack the know-how to reach the NTEs market segment. The study also examines the operating characteristics and key concerns of credit guarantee schemes. Credit guarantee schemes promote the flow of finance to NTEs by acknowledging their limited ability to provide acceptable collaterals, and by mitigating risks caused by the poor credit analysis and pricing skills of banks whose loans are to be guaranteed. Some thoughts on how to make Ghana's credit guarantee schemes sustainable are also provided.
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters of Business Administration