State to support micro-finance firms

The Minister of Finance and Economic Planning, Seth Tekper, has called for micro finance institutions to be included in the support framework of the Export Development and Agriculture Investment Fund (EDAIF), in order to widen the pool of funds available to micro finance companies to source capital for onward lending to micro enterprises.

He said micro finance companies deserve to be included in the EDAIF support plan because of the crucial role they play in promoting economic activities of low-income earners, who find it difficult to access formal banking services.

“There is a clear synergy between EDAIF and micro finance. A lot of micro finance institutions have sprung up lately, and I would like us to look at how we can support them with EDAIF funds -- considering that micro finance institutions provide lending support to SMEs,” he said.

The call comes at a time government has begun processes to finalise the review of the law establishing EDAIF to broaden the scope and mandate of the Fund.

The Private Enterprise Foundation, led by its President, Nana Osei Bonsu, also shares in the Finance Minister’s advocacy to include micro finance companies in the institutional support framework of EDAIF since they support activities of businesses that make up a big chunk of economic activities in the country.

Established in 2000 by an Act of Parliament as the Export Development and Investment Fund, the law was amended in 2011 to expand the scope of application for the Fund’s resources to include the development and promotion of agriculture related to the agro-processing industry.

The operation of the Fund has in recent time elicited calls for its review, to cover other sectors and economic activities which are not necessarily focused on the export market.

The Minister of Trade and Industry, Haruna Iddrisu, explained that three significant development in the economy necessitated the review of EDAIF operations: to expand the scope and mandate of the Fund; to go beyond export and export trades; and to allow EDAIF give support to industries -- particularly the manufacturing sector and SMEs as well as start- ups.

“We recognise that the private sector’s major challenge is access to and cost of credit. We should be able to revise EDAIF to lower its interest rate. EDAIF is capable of lending at 12.5% or 15% instead of pairing it to the lending rate of the banks.

“EDAIF can also manage the on-lending rate regime, so that the private sector can be assured of adequacy and availability of funds at a flexible and lower interest rate,” he said.

Last year, EDAIF disbursed GH¢370million to 90 institutions and organisations undertaking various projects.

Out of the amount, GH¢22million was in the form of credit and GH¢93million in the form of grants, while GH¢22million was used for agriculture and agro-processing.