Three financial institutions have signed a tripartite agreement to help develop the informal sector by providing people with credit facilities in addition to helping informal sector workers to be part of a social security scheme.
The three institutions made up of the SSNIT Informal Sector Fund, HFC Bank Ghana Limited and Boafo Micro finance Services have a common goal of strengthening the economic security of people in the informal sector.
Under the agreement a credit scheme for members of the fund shall be operated under the name Occupational Pension Loan Scheme (OPEN) where persons aged between 15 and 59 and are self-employed would contribute any amount based on their preference and ability.
Dr Francis Sapara-Grant, Managing Director of the SSNIT Informal Sector Fund, an initiative by the Social Security and National Insurance Trust (SSNIT), explained that a member of the scheme could use his or her contributions as partial collateral to secure credit from other regular financial institutions.
He further explained that a member was permitted to make periodic withdrawals from the scheme while 50 per cent of a person's contribution would be used as a retirement account for individual members.
"Contributions by members are divided into two equal parts and credited to two individual sub-accounts, that is Occupational Scheme Account (50 per cent) and Retirement Account (50 per cent) after deduction of Life Insurance Premium," Mr Sapara-Grant added.
He mentioned the Old Age Pension, Disability Benefit and Survivor's Benefit as some of the entitlements members could have when they became part of the programme.
The signing of the agreement, he said, signified the need to harness the efforts of the complementary institutions in the promotion of the welfare of the elderly and the eradication of destitute from Ghana.
Mr Asare Akuffo, Managing Director of HFC Bank, said Ghana had a large informal sector that needed to be supported to enable Small and Medium Scale enterprises to grow into large firms to help contribute formally to the economy.
Mr Michael Osege, MD of Boafo Micro finance Services Limited, a subsidiary company of HFC, said his organization would design loan products and service loans through the Bank and the fund.
He said HFC would provide the banking networks for mobilization of contributions and facilitate the disbursement of loans and repayment and well as the collection of contributions from members through its branches.
Mr Osege said the organization would develop implement plans but was currently testing in Accra and Koforidua and would later roll out the scheme in Kumasi and Takoradi.
Nana Fredua Agyemang Pambuo I, Chairman of Executive Council of the SSNIT Informal Sector Fund, who also chaired the function lauded the initiative to implement a social protective scheme for informal sector workers.
He cited a study that indicated that most informal workers wanted an opportunity to contribute to a social security scheme and said about 80 per cent of Ghanaian workers were in the informal sector.
He urged the parties to form a joint committee made up of members from all three sides to see to the successful implementation of the fund.