Access to credit from Non-Bank Financial Institutions (NBFIs) by Small and Medium Scale Enterprises (SMEs) in Kumasi Metropolis
Access to credit for Small and Medium Scale Enterprises (SMEs) in Kumasi Metropolis in the Ashanti Region of the Republic of Ghana, is one of the thorny issues as far as growth and development of SMEs is concerned. This study is meant to highlight on how SMEs could reasonably access credit from financial institutions. It also gives an expose on credit delivery processes of Non-Bank Financial Institutions (NBFIs) to economically support SMEs. The study received responses from 329 owners of SMEs, three (3) NBFIs, National Board for Small Scale Industries (NBSSI) and experts in credit delivery processes and SMEs activities. Questionnaire was used to gather primary data for the study through cross-sectional survey design. Secondary data from literature review of the study supported questionnaire administered to collect data from respondents. The study used tables, percentages and Microsoft Excel to produce bar graphs for data presentation, analysis and discussion. The study identified inadequate SMEs funding, non-formalization of SMEs credit from friends and family members, cash lien, collateral security, insider loan fraud, high interest rates, misclassification of borrowers of credit and credit repayment periods as challenges of SMEs access to credit and credit delivery processes of NBFIs. The study called for the establishment of SMEs Development Fund (SMEDEF), formalization of SMEs credit from friends and family members, proper administration of collateral security for loans, proper classification of borrowers in credit delivery, effective management of cash lien, competitive interest rates on loans, flexible credit repayment periods, restrictions on insider loan fraud and SMEs capacity building to streamline credit delivery in SMEs and NBFIs operations.
A thesis submitted to the School of Graduate Studies of Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirements for the award of a Master of Science Degree in Development Policy and Planning,