Players in the banking sector have been called upon not to pass on the additional five per cent tax imposed on their gross profits to their customers, particularly to small and medium enterprises (SMEs).

The Executive Director of the National Board for Small Scale Industries (NBSSI), Mrs Kosi Yankey-Ayeh, who made the call in an interview with the Daily Graphic, said the imposition of the tax was not to hurt the banks but to help the economy recover from the twin impacts of the banking crisis and the COVID-19 pandemic that had shaken the economy.

“There is a financial challenge the country is grappling with because of the COVID-19 pandemic and, therefore, it is up to the government to find ways to tax companies such as the banks a bit more,” she said.

Sharing her perspective on the implications of the additional tax imposed on banks on SMEs shortly after the maiden Graphic Business/Access Bank SME Clinic in Accra yesterday, she further explained that it could be tricky and the banks must be careful not to lose their customers because increasing interest rates could drive the SMEs away.

Banks protest

The Ghana Association of Bankers (GAB) has kicked against the levy, describing it as counterproductive, a recipe for high lending rates and an attempt to make the existing banks victims of the woes of their collapsed counterparts.

The President of GAB, Mr John Awuah, told the Graphic Business last week that the tax would double the burden of the industry and make banks unattractive for low-cost capital.

But in her response, Mrs Yankey-Ayeh called for patience and asked the banks not to be hasty with their decision to pass on the levy, but rather work out more favourable facilities to enable the SMEs to access funds to grow their businesses and repay in time.

“When the SMEs grow, they increase their engagement with the banks and, therefore, we must all join to make them grow and not do what will deter them from working with the banks.

She expressed the hope that the banks would reconsider their decision and see the positive side of the development and work with the government to improve its financial position.

Revenue to state

Per the additional tax imposed, banks project that they risk shedding a minimum of GH¢300 million of their bottom lines every year because of the levy imposed by the budget.

A Bank of Ghana (BoG) report has revealed that the sector’s gross profits peaked at GH¢6.08 billion last year, growing at an average of 24.3 per cent since 2018, hence the levy can rake in a minimum of GH¢300 million every year, starting this year.

Rationale for new tax

The 2021 Budget Statement explained that the financial sector clean-up and the refund of money to depositors had restored investor confidence and protected the hard-earned savings of millions of Ghanaians.

However, the exercise cost the state more than GH¢21 billion.

Consequently, the government decided to introduce the financial sector clean-up levy on the profit before tax (PBT) of banks to defray outstanding commitments in the sector.

Embrace digitisation

During discussions at the SME Clinic, the Association of Ghana Industries (AGI) advised micro, small and medium enterprises (MSMEs) to take digital solutions as a lifeline for their survival.

The umbrella body of manufacturers and related businesses said information, communication and technology (ICT) solutions had become pertinent to business survival and continuity such that companies that failed to develop capacity and deploy digital services in their operations faced the risk of collapsing.

The Chief Executive Officer (CEO) of the association, Mr Seth Twum-Akwaboah, said SMEs must also do away with misconceptions that digital services were costly and the preserve of large companies and join the trend before it was too late, reports Maxwell Akalaare Adombila.

“You do not need to have so much money to go digital but sometimes, those are the misconception that we have. It is not about money but about business solutions and making progress in your business,” Mr Twum-Akwaboah said.

He, therefore, impressed upon them to develop the needed skills and expertise to enable them to leverage digital services to grow their businesses and participate in the Africa Continental Free Trade Area (AfCFTA), which was being implemented.

Mr Twum-Akwaboah was one of the panellists at the thought leadership programme initiated by the foremost business and finance newspaper and the leading bank in the country, building capacities of SMEs.

The other panellists were the Divisional Head, Retail Banking at Access Bank, Mr Stephen Abban; the Group Head of Business Banking at Access Bank, Mr Kafui Bimpe, and the Chief Executive Officer of the National Board for Small Scale Industries (NBSSI), Mrs Kosi Yankey-Ayeh.

Cost of data

The AGI CEO said while stakeholders such as the association advocated increased utilisation of digital services, the government and telecommunication service providers needed to reduce the cost of data to ensure that the environment was conducive enough.

“I think it is something that we have to look at. In other countries, data is not that expensive but why it is that expensive in Ghana, I don’t know,” he posited.

Digital payment solutions

Ama Amankwah Baafi reports that Access Bank Ghana has developed digital payment solutions for SMEs to aid their easy and secure transactions, especially at the peak of the COVID-19 pandemic.

This is in line with the bank’s desire to be an enabler to help the businesses in the SME sector get to the level of maximising the opportunities in the digital space.

The solutions include Access Pay, an online payment solution that helps manage the finances of SME operators wherever they are; Merchant Pay, the use of mobile technology to make payment; Integrated POS, a device that accepts payment from all platforms, and Access Africa, a digital solution aimed at promoting instant payment through intra-regional trade, especially following the birth of the Africa Continental Free Trade Area (AfCFTA).

The rest are Access E-Payment and Collections, a payment gateway that can be deployed on a company’s website; Access Mobile, a mobile app for accessing all banking services, and Ghana QR Code.

The Group Head, Business Banking at Access Bank, Mr Kafui Bimpe, who explained the solutions, at the Graphic Business/Access Bank SME Clinic, said they were an addition to existing payment cards.

He said following COVID-19, consumer behaviour had also changed significantly as most people had moved from the traditional way of doing things to different ways.

“A lot of people will not like to go to shops to buy products; some will not like to visit some offices to engage the services of some professionals. Thus, the need to educate, build capacity and migrate as quickly as possible to the digital space to take advantage of all the opportunities that are there,” he said.

Also, he said, because the cost of doing business with banks was high, Access Bank had dedicated the MPower Account to SMEs which granted them free transactions in order not to overburden them with charges.

SME potential

The Managing Director of Graphic Communications Group Limited, Mr Ato Afful, said the Graphic Business/Access Bank SME Clinic was created to offer a platform on issues affecting the development of the SME sector in the economy.

He noted that the sector was a critical one in all economies because it provided two-thirds of all formal jobs in Africa, Asia and Latin America and 80 per cent in low-income countries in Sub-Saharan Africa.

In Ghana, Mr Afful said, SMEs provided a great number of jobs as government agencies could not absorb all unemployed persons, especially the youth.

“The growth of SMEs is indeed important to occupy our attention enough and also for follow-through,” he said.

Mr Afful said SMEs also faced challenges such as access to finance, strategic management and operational inefficiencies which if resolved could make them resilient.

“Digital innovation is a potential solution that can introduce efficiencies into the SMEs operations and to strengthen them for today and also for the future,” he said.

Need for digitisation

The Divisional Head, Retail Banking at Access Bank, Mr Stephen Abban, corroborated the view that digitisation offered tremendous opportunities to increase productivity and create jobs.

He said a digital economy offered new opportunities for scaling up and reducing cost, including through the creation of new business models to challenge existing ones and which SMEs were the first to stand to benefit.

“It is, therefore, essential for the use of digital tools in companies that are user-friendly. In any solution, the respective tool should be mobile. Mobile solutions can be used on the go and at different locations,” Mr Abban said.

SME Clinic

The event, which was held on the theme: “Boosting SME Resilience with Digital Solutions,” generated dialogue on the need to transform their mindset in order to excel in their enterprise.

The forum also set the tone to develop a situation in which entrepreneurs could see themselves beyond the present into the future and add value to their businesses and become more competitive.

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