Business strategist and financial expert, Dr. Jerry Monfant has explained that the main reason why banks fail to support startups with loans is because they have not been designed to perform that function.
The economist furthered stated that many at times these startup businesses do not bring in much profit after they have secured loans from the banks and that discourages financial institutions from giving out loans.
He told Sefah-Danquah on the Happy Morning Show: “The objective of the bank is to make profit, and make an income and that is why they will consider the risk factors that you won’t veer into . Under normal circumstances, it is not the banks that are supposed to help. It is the government that is supposed to help.”
He added that there are a lot of risks in supporting startup business as mostly the loans given out are from deposits of other people.
“These banks use people’s deposits in giving out loans and if you use people’s monies in giving out loans and much of these loans are non-performing,the same government and the Bank of Ghana will revoke your license because you cannot pay your depositors,” he added.
The debate on entrepreneurship and funding began when Finance Minister Ken Ofori Atta urged Ghanaian youth to venture into entreprenuership because government’s payroll is full.
He was speaking at the Springboard Youth Dialogues which focused on government’s proposals for creating a million jobs, stimulating innovation and start-ups, YouBanC and other opportunities under Ghana CARES Obaatanpa Programme.
The Minister explained that 60% of Ghana’s revenue is spent every month on the payment of salaries of public sector workers.
