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29.07.2006 Business & Finance

20 Million Dollar Package To Support Loans For SMEs

By GNA
Mr Alan Kyerematen, Minister for Trade, Industry, Private Sector Development and PSI Mr Alan Kyerematen, Minister for Trade, Industry, Private Sector Development and PSI
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The Ministry of Trade, Industry, Private Sector Development and PSI has set aside a 20 million-dollar package to indemnify local banks against loses in respect of lending to Small and Medium Enterprises (SMEs).

Mr Alan Kyerematen, the Sector Minister, said yesterday that this formed part of Government's interventions to improve investment finance to SMEs and the banks should not be reluctant to grant loans to these businesses after the necessary feasibility studies.

Speaking at a media and small scale enterprises dialogue to promote these enterprises, he said the Government would do all it could under the National Trade Policy to remove bottlenecks constraining the development of SMEs.

The forum was organised by the Ghana Journalists Association (GJA) in collaboration with KAB Governance Consult and the Business Sector Advocacy Challenge (BUSAC) Fund. It was under the theme: "Key Government Policies for the Promotion of Micro and Small Scale Enterprises."

Mr Kyerematen said some of these interventions included investment finance for SMEs that would provide a 50 per cent guarantee to banks on losses on their SMEs loan portfolio. He said it was estimated that 70 per cent of all industrial establishments were in the SMEs and about 85 per cent of manufacturing employment came from that sector.

SMEs, he said, had a significant contribution to make to Ghana's socio-economic development and growth and the attainment of a middle-income status of 1,000 dollars per capita per annum by 2015.

"The thrust of the Ministry's policy agenda is thus the promotion, development and growth of a vibrant, productive and competitive SME sector that generates sustainable employment, creates wealth and addresses spatial imbalance."

Mr Kyerematen said the implementation of these strategies was being undertaken through investment finance for SMEs, business development services, infrastructure support, commercial and market linkages and technology development. He said the International Finance Corporation, the private arm of the World Bank, was providing 20 million dollars long-term funding to Banks for on-lending to SMEs for a period ranging between five and seven years.

He said the success of all these programmes was a stable macro-economic environment adding that plans were underway to enact a legislation that would compel all small businesses to join the various business associations for coordination.

Mr Kwesi Afriyie Badu, Chief Executive of KAB Governance Consult, said the greatest governance challenge was how to reduce poverty to make people to appreciate and participate in governance. He said there was the need to improve on micro and small-scale enterprises as they made up the majority of the workforce adding that access to finance continued to be a problem due to huge interests on loans.

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