EDAIF, EFC to merge into new EXIM Bank

Government is set to appoint a transaction advisor to guide the integration of EDAIF, Eximguaranty and Export Finance Company into the new Ghana EXIM, a report by the Finance Committee of Parliament has revealed.

This follows passage of the Ghana Export-Import Bank bill by Parliament on Wednesday, and it is expected that the bill’s assent into law by the president will make it operational sometime this year. It is expected to help address the challenge of long-term credit for exporters.

The bill’s passage grants government the power and authority to establish an EXIM Bank, which will be a quasi-government institution acts as an intermediary between national governments and exporters to issue export financing.

Now the transaction advisor is expected to value the equity stake of Eximguaranty and Export Finance in order to establish the value of minority interest.

It will also advise on negotiations with minority shareholders of Eximguaranty and Export Finance Company, and also effect the transfer of assets and liabilities of affected institutions to the EXIM Bank.

Finance Minister Seth Terkper explained that a complete review covering each institution’s specific business, shareholding structure, financing and governance has already been carried out.

He indicated that the review’s outcome showed that with the exception of Ghana Export Promotion Authority (GEPA) -- which is primarily an export-promotion agency, the functions of the other three, Export Finance Company Limited (EFCL), Eximguaranty Company Limited (ECL) and Export Development and Agricultural Investment Fund (EDAIF), fit into the proposed functions of the Ghana EXIM; and as such will be integrated into the Ghana EXIM.

“GEPA will however continue to operate as a stand-alone organisation with an expanded mandate for export promotion and development,” he said.

Mr. Terkper added: “Despite efforts through initiatives such as the Export Financing and Guarantee Institution, Export Development and Agricultural Investment Fund (EDAIF) among others, Ghana’s export financing institutions have not been able to make a meaningful impact on the export sector because of poor capitalisation and a vague definition of their mandates”.

According to Seth Terkper, the aim of establishing the Ghana EXIM is to create an institution that consolidates past efforts and becomes the key engine for developing Ghana’s export activities.

A report of the Finance Committee on the Ghana Export-Import Bank bill further indicated that the bank, which is to be a non-deposit-taking institution, will assist exporters to compete internationally by providing insurance and finance facilities to support their overseas activities.

The proposed bank is also aimed at promoting acceleration of Ghana’s drive toward achieving a more diversified economy to help the country become resilient to external shocks, and to help improve the country’s capacity to produce goods and services in the competitive global marketplace.

President John Mahama is equally hopeful establishing a Ghana Export and Import Bank (EXIM) will move the country from being import-dependent to a being large-scale exporter.

He said it will also bridge the imbalances between trade and infrastructural development.