Facilitators of the Export Development and Investment Fund (EDIF) have not processed a single application for disbursement since the scheme took-off about a month ago.
Originators of the fund, the Ministries of Trade and Industry and Finance, on Monday expressed concern over the non-disbursement so far but the banks, which were the designated financial institutions to facilitate the process were adamant to co-operate unless measures are put in place to determine who bore the risk in case of non-payment of the loans.
The Ministries, therefore, met the 10 banks involved in the operation of the fund to iron out shared concerns and come out with the best solution to ensure that it became operational as soon as possible. The designated banks involved with the disbursement included the Agricultural Development, Ghana Commercial, SSB, National Investment, Prudential, Cal Merchant, Stanbic and The Trust Banks.
According to shared concern of the banks, the Act that established the Fund made room for an apex body, which is the EDIF Secretariat, to oversee the disbursement of the Fund. Most of the contributions into the Fund came from revenues generated from levies on imports. Some bank officials, who wished to remain anonymous, said most businesses interested in accessing the Fund were start-ups and, therefore, bore very high risks.
Notwithstanding, applicants would pay interest of 15 per cent of which 10 per cent would go to the banks with five per cent going to the other operators. To access the Fund, an applicant would fill three applications, one for himself, one for the banks and the other for the EDIF Secretariat.
This would enable both the applicant and the EDIF Secretariat to monitor the processing of the applications, which must be completed in 37 days. The banks' concern was that despite the 10 per cent interest, the risks were very high and the collateral, such as salt ponds were not good enough.
Until the Ministries agreed to take part of the risks, they were not prepared to facilitate disbursement. Trade Minister Dr Kofi Konadu Apraku, told the meeting that government was worried because the economy was not moving at the pace that would enable it to meet targets.
The establishment of the fund was expected to among other things promote exports and create employment, the Minister said, adding that the current level of unemployment was unacceptable. The Fund, promulgated by an Act of Parliament in 2000, has so far not met expectations.
Dr Apraku said: "There is a state of apprehension and concern among the general public and industries over the inability to move the industrial sector of the country." Dr Apraku noted that it was realised that the major constraint to exports and industrialisation was access to credit and the establishment of the Fund was government's own way of making funds available to the export sector.
"However, there is a level of risk in every business venture", the Minister told the bankers and added that there was the need for them to come to a consensus in order not to establish the belief that the banks always wanted the easiest way out.
He said the Act that established the Fund was specific on the fact that the banks should bear the risks and urged them to ensure that the issue did not degenerate into a political one. Mr Yaw Osafo Maafo, Minister of Finance, observed that the Act had a national character because it was one among many which had a little political difference at Parliament.
He said the Ministry of Finance was, therefore, ready to support the banks and work with the Bank of Ghana to ensure that the Fund became operational. This, he said, was because the government was taxing importers and using the revenue as inflow into the Fund, but "if we are not able to use the monies generated, then it was no use collecting them."
Mr Osafo Maafo, therefore, urged the banks to do their best to facilitate the operation of the Funds and said there was the need for them as professionals to take the decision to pass the test of banking.
