$2.8m Grant For MSMEs Released

The Business Development Services (BDS) Fund Project has released a grant amount of $2.8 million under the World Bank-supported Micro, Small and Medium Enterprises (MSME) project.

Out of the total amount, $1.8 million will go directly to MSMEs while $1.3 million has been earmarked for renewable energy sub-projects under the Ghana Energy Development Access Projects (GEDAP).

The BDS Fund is a matching grant scheme established under the Ministry of Trade & Industry in collaboration with the Ministry of Energy to support the development of a marketplace for business development services.

It is one of the components of the MSME project established in 2007, with the support of the World Bank, to enhance the competitiveness and employment levels of Ghanaian MSMEs through financing and technical assistance.

Under the Fund, beneficiaries are expected to contribute 50 per cent in matching grants towards the cost required to undertake identified and approved projects or activities by the beneficiary firms (MSMEs).

At the launch of the second phase of the project in Accra, Bernard Coes, Team leader, BDS Fund said 'the fund seeks to enhance the competitiveness of the private sector through the provision of subsidized grant to MSMEs to procure services that are required to overcome their BDS challenges.'

'Additionally, the fund facilitates access to markets and financial services for MSMEs and commercially-oriented renewable energy enterprises through capacity building and technical services provision,' Mr. Coes emphasized.

He indicated that to improve the effectiveness of outreach to target beneficiaries, and streamline the fund application and disbursement processes, the current phase of the Fund aims to focus on building the capacity of local Business Support Organisations and Business Member Organisations (BMOs) to undertake outreach and grant application processing.

He said qualified applicants include 'MSME manufacturers in agri-business, food processing, plastics, salt, cosmetics, textiles and garments, tourism, horticulture, furniture industry, providers of services in the construction industry and other sectors and industries of interest.

In her address, the Minister of Trade and Industry, Hannah Tetteh revealed that the first phase of fund started in January 2008 and came to an end in March 31, 2011.

During the period, a total of $2.4 million out of $3.9 million was disbursed to support 142 beneficiary firms.

She noted that the re-launch of the BDS Fund is important because 'it signifies the commencement of operations under the Fund which would be followed up with a sustained effort to ensure publicity of the Fund in all regions.'

She added that the re-launch is significant because there has been major alteration to the type of activities that would be eligible during the Phase II of the fund.

'Under the second phase, support will go to upgrade and integrate value chains. These are meso-level integrations that will target reduction of constraints along the critical control points of the value chains of selected priority sectors,' she added.

Ms Tetteh confirmed that the second phase of the scheme will principally provide technical assistant support to participating financial institutions and other eligible banks seeking to develop and expand efficient term lending to SMEs.

She said this will go a long way to assist MSMEs that have received loans from the partner banks to remain bankable, thus reducing the number of Non-Performing Loans (NPLs) to increase the growth of the firms.

She added that it will also 'help business service providers to expand services tailored for targeted MSMEs.

'It is also expected to facilitate linkages between MSMEs and larger firms and markets through support to clusters of firms or lead firms working with such clusters of MSME suppliers.'

The Minister advised fund managers that 'effective monitoring of disbursements should be key in your operations in order that problems associated with the first phase will not re-occur.'

She also urged them to ensure that the matching grant funds are disbursed in good time to enable BDS providers complete their assignments for the beneficiary clients and called on the trustees of the BDS Fund to be transparent and fair in their assessment and subsequent disbursement of the Fund.

By Esther Awuah