Boost to Small & Medium Scale Enterprises

?21 bn loan for Trust Bank ... Agreement clinched in Accra

An initial amount of ?21 billion loan agreement for the Trust Bank Limited has been signed between the Swiss State Secretariat (SECO), the Swiss Government's agency for developmental finance and the bank in Accra yesterday.

The credit, which is for on-lending to Small and Medium Scale Enterprises (SME)s, and has no exchange rate risk because it is denominated in cedis, would be targeted at the productive sector of the economy.

According to the agreement, the funds would be lent to SMEs at a competitive market rate but below the prevailing lending rate.

The Ambassador of Switzerland, Mr. George Zubler, signed the agreement on behalf of SECO, whilst the Managing Director of the Trust Bank, Mr. Paul Carden, signed for his bank.

Commenting on the loan agreement, the Minister of Private Sector Development, Hon. Kwamena Bartels, said the main problem facing SMEs in the country is the inadequate access to long term and medium term loans.

Hon. Bartels observed that most of the time, SMEs collapse when they go for short-term funds for retooling because they have very little access to medium and long term funds as the banks are not ready to provide as they themselves hold huge short term funds in the form of bills and bonds.

He advised commercial banks in the country to change their approach and attitude towards the administration of loans to SMEs.

"Invariably, banks want a situation where they would have 100% assurance of repayment, but we believe that a little flexibility on the part of the banks towards SMEs would be useful for the country to enable entrepreneurs to access these facilities," the minister added.

He said most of these SMEs need ridiculously small amounts to help propel them into successful business concerns.

The minister, who doubles as the Member of Parliament for Ablekuma North, said he was happy because he felt the huge gap between the SMEs and the Banking System would be closed with the coming of this loan.

He was full of praise for the Switzerland Government for making this loan a reality and hoped similar partnership with the private sector would come forth in the future.

The MP advised the bank to utilize the loan wisely. Earlier, the Ambassador of Switzerland said that the loan had been given to the Trust Bank in order to promote public-private partnership and also to provide the private sector, especially the SMEs, the adequate long and medium term finances.

He further stated that the loan would contribute to the capacity building in the banking industry, as part of the loan would be used to train staff in SME loan management.

His Excellency, the Switzerland Ambassador noted that the loan arrangement would promote good corporate governance, transparency and accountability as the bank would be required to do due diligence and credit analysis of SMEs before loans are given out.

He asserted that his country would provide more loans and assistance to the bank and other indigenous banks in the future.

The Managing Director of the Trust Bank Limited said that the credit would be targeted at SMEs because they believe that SMEs could make a tremendous contribution to the development of the private sector to make it the real engine of growth.

He promised the Swiss government and the government that they would make good use of the loan and would do all they can to maintain the goodwill they have created over the years.