10 million Euros SME Credit Launched

Accra, Dec. 16, GNA - A 10-million Euro credit line to support the growth of Small and Medium Enterprises and enhance their contribution to the country's development was launched in Accra on Tuesday. Known as the Ghana Private Sector Development Fund, the credit facility made available by the Italian government would allow beneficiary SMEs to finance capital goods, spare parts, consumable production inputs and services.

The agreement also provides for viable start-up companies. The loan has an interest rate of 0.5 per cent with a moratorium period of 24 years and a repayment period of 36 years. The Ghanaian government is bearing all exchange risks connected with the credit. To be eligible for the facility, SMEs must be wholly Ghanaian owned and have between five and 300 employees with a turnover between EURO 30,000 and one million.

The total level of support for each SME would vary between 30,000 to 450,000 Euros in local currency to be channelled through local financial intermediaries.

Beneficiary SMEs are mandated to purchase 75 per cent of their supplies from Italy while the rest 25 per cent could be obtained from local sources.

The credit agreement, which was approved by Parliament on December 4, 2003, however, exclude SMEs, which operate in the farming sector, harm the environment or deplete the natural resources, make use of child labour or have direct or indirect link with military activities, wood working, furniture production and tobacco processing.

Mr Kwamena Bartels, Minister of Private Sector Development said the meaningful contribution that SMEs could make to economy growth was being hampered by access to credit.

It is in this direction that government is channelling funds that it had secured from various agencies through the local banks to deepen intermediation to SMEs.

Mr Bartels expressed the hope that SMEs, which were granted the facility would be committed to pay back the money so that others could benefit from it.