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Ghana launches 22 million-Euro credit to support SMEs

Ghana on Tuesday launched a 22- million Euro credit line to support the growth of Small and Medium Enterprises (SMEs) and to enhance their c ontribution to the country’s development.

The Italian government provided the money to the Ghana Private Sector Developmen t Fund to allow beneficiary SMEs to finance capital goods, spare parts, consumab l e production inputs and services.

The agreement also provides start-up funds for viable companies.

This is the second phase of the project initiated in 2003 to provide a lifeline to the SMEs to foster economic development and reduction of poverty.

An amount of 10 million Euros was fully disbursed between 2003 and 2008 with 29 SMEs in the agro-processing, construction, mining, auto services and health rela t ed services, among others, being the beneficiaries.

The loan of 20 million Euros is interest-free with a moratorium period of 20 yea rs and a repayment period of 36 years. The Ghana government is bearing all excha n ge risks connected with the credit.

The remaining two million Euros is a grant component and would be used to assist the businesses in preparing and implementing their business plans as well as fo r capacity building.

To be eligible for the loan, SMEs must be wholly Ghanaian owned and be part of t he production or the service sectors as well as not make use, directly or indire c tly, of child labour.

The total level of support for each SME would vary between 25,000 and 550,000 Eu ros in local currency to be channelled through local financial intermediaries.

Beneficiary SMEs are mandated to purchase 70 per cent of their supplies from Ita ly while the rest 30 per cent could be obtained from local sources.

Speaking at the launch, Ms Hanna Tetteh, Ghana’s Minister of Trade and Industry, said the development of a vibrant private sector was key to the achievement of g rowth, expansion and diversification of the economy.

She said the government’s vision was to create a nation of innovative entreprene urs, adding that the SME sector was critical to the accelerated economic develop m ent and growth agenda of the country.

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