Introduction to the 24-Hour Economy Programme
The central bank has expressed its support for the 24-hour economy programme, citing its potential to boost capital formation, improve asset use, and create jobs. However, the success of this programme depends on the soundness of banks and the availability of affordable credit.
The Role of Banks in the 24-Hour Economy
Ismail Adam, Director of Banking Supervision at the Bank of Ghana, noted that the success of the 24-hour policy will ultimately boost the banking sector through increased utilization of financial services by industry players. He emphasized that effective monetary policy, financial supervision, and innovation in payment infrastructure are necessary for businesses to thrive, investments to grow, and employment to expand.
Challenges Facing the 24-Hour Economy
Despite the potential benefits of the 24-hour economy, there are several challenges that need to be addressed. Reduced inflation and stable prices are crucial in giving the central bank space to cut interest rates, which would widen access to loans. However, banks must uphold strong governance and risk management to prevent failures that could undermine the system. Payment infrastructure also plays a critical role, with the central bank aiming to expand the use of ATMs, online platforms, and digital payments to reduce transaction costs and ensure liquidity around the clock.
Structural Barriers to the 24-Hour Economy
Structural barriers, such as high borrowing costs, strict collateral requirements, and short-term lending structures, constrain the growth of businesses. The 24-Hour Secretariat’s Presidential Adviser, Goosie Tanoh, acknowledged that while finance is central to the plan, many businesses face these challenges, limiting their ability to scale up. The policy is centered on micro, small, and medium enterprises, cooperatives, and both local and foreign firms, but without more flexible credit, their growth remains limited.
Overcoming the Challenges
To overcome these challenges, the Secretariat has engaged stakeholders, including banks, to design a package of financing solutions that align with central bank standards while remaining profitable for lenders. This package aims to provide more flexible credit options for businesses, enabling them to scale up and contribute to the growth of the economy.
Conclusion
In conclusion, the 24-hour economy programme has the potential to boost capital formation, improve asset use, and create jobs. However, its success depends on the soundness of banks, the availability of affordable credit, and the addressing of structural barriers. With the right conditions in place, including effective monetary policy, financial supervision, and innovation in payment infrastructure, the banking sector can thrive, and the economy can grow sustainably. By providing more flexible credit options and addressing the challenges facing businesses, the 24-hour economy programme can unlock the full potential of the economy and drive sustainable development.
