IFC Survey Reports Expansion of Ghana’s Leasing Market
IFC, a member of the World Bank Group, today released the findings of its second annual survey of Ghana’s leasing market. The results show that the number of new leases issued in the country grew from 311 in 2005 to 536 at the end of 2006 – an increase of 72 percent. The total lease portfolio represented by gross lease receivables by the sector also increased by over 73 percent from $29.8 million in 2005 to $51.3 million in 2006. The report notes a significant increase in the number of leasing providers, from seven in 2005 to 12 in 2007, with many banking institutions entering the sector.
The Leasing in Ghana 2007 report represents the most comprehensive survey of Ghana’s leasing market to date. It highlights major developments in the leasing industry in 2006 and makes recommendations for further improvements in the policy, regulatory, and tax environments that govern the sector. The report was compiled by the SECO IFC Leasing Program, a project that seeks to enhance the role of leasing as an alternative financing mechanism for businesses in Ghana.
Launching the report, Taba Cookey, SECO IFC Leasing Program Manager, said, “IFC is committed to supporting efforts that deepen Ghana’s financial sector and expand access to finance for the private sector. The 2007 survey provides strong evidence that the leasing sector is playing an increasingly important role in financing the needs of private businesses in Ghana.”
Philippe Sas, Economic Advisor at SECO, said, “Leasing is important, because it benefits mostly small and medium enterprises that generally cannot access financing from banking institutions. It makes it easier for these businesses to acquire capital equipment even when they lack the credit history or sufficient collateral to access traditional forms of financing.”
Speaking at the launch, Dela Selormey, Head of Banking Supervision at the Bank of Ghana, commended the development of the leasing sector and outlined various efforts by the bank to support further growth of the financial sector.
Worldwide, leasing has demonstrated the ability to increase investment in capital equipment. Leasing plays an important role in economic development. For example, it is reported that every 8 to 9 percent growth in leasing activities leads to a corresponding 1 percent average growth in a country’s GDP. In developed countries, leasing is used to finance about one-third of private investments.
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