OBG talks to Kofi Amoah, Owner, PVI Holdings, and Board Member, SIC Insurance Company

Interview: Kofi Amoah

How is the expansion of microfinance helping to encourage entrepreneurship?

KOFI AMOAH: This is an important area because there is a big opportunity in growing the larger Ghanaian economy, including the informal sector. There are many people who need a $400 loan to get going. Microfinance is kicking off gradually and encouraging savings and loans, which is a new approach.

But there are also big challenges. For example, we do not even have an address system. Therefore, when you give a loan to somebody you have to physically go to their businesses and homes. Since there are no addresses, you need a descriptive way to memorise who these people are. So the substructure of our infrastructure does not help our system grow. This makes it more expensive to give loans to these people. If we can circumvent these problems, we can fund the huge number of Ghanaians who would like to be self-employed. Since our private sector is not growing fast enough we cannot absorb many unemployed. If we had a creative way of people employing themselves with small credit lines and loans, it would be helpful.

Women tend to be the best customers. They are more willing to pay back loans and go along with the programmes and commitments they make. The micro-retail sector in Ghana is run by women, so if you focus on lending to these women and perfect the system you will see a lot more progressive women hiring people and growing the economy.

What do you see as the greatest weaknesses of the business environment in Ghana?

AMOAH: The biggest challenges are the cost of doing business. One would be the cost of capital; the other is a labour force that lacks training. There cannot be economic development without human capital. Human capital is low in terms of quality and so companies must spend a lot of money training and retaining people. The next would be the availability and cost of electricity. Factories and companies cannot work without power, so this is an area which needs improvement. Other than that you need to allow the creativity of local people. Allowing local content and local participation is what will ultimately create a better economy. There needs to be a mix of locals and foreigners working together.

How can education be improved to better serve the needs of the job market?

AMOAH: Reading, writing and arithmetic have so far been the only focus. Therefore, public officials, academia and private companies should cooperate on promoting skills to match the job market. This way schools can do their curriculum based on the needs of Ghana’s industry 5-10 years from today. The public sector must know these are the challenges we face when creating a plan for investing in education. Currently 33% of public expenditure goes towards education.

Nevertheless, many graduates lack skills because the structure is not there and teachers are not well motivated. The few good people that come out are not absorbed by the private sector, so they go to work in some other country. Why invest in education when they will leave to go and work abroad? We must make polices more efficient. We should start the basic skills in primary school, and then start building on technical skills that will be in demand in Ghana.

What role can the diaspora play in furthering Ghana’s economic development?

AMOAH: Ghana can learn from the recent resurgence of the East Asian economies like China, India and Malaysia. These are countries that appreciated their people who went out to study and gave them incentives to come back. When this country’s previous government came in they had a homecoming summit to encourage repatriation. Without a concerted effort to have a programme for them to come home and adjust, a lot of them get frustrated and leave. There is a great talent pool of Ghanaians in the diaspora that if used effectively can help to drive the Ghanaian economy.