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30.05.2007 Business & Finance

Kyerematen launches 118 million-dollar MSME project


Trade and Industry Minister, Alan Kyerematen on Tuesday launched the 118 million-dollar Micro, Small and Medium Enterprises Project (MSME) and expressed the hope that it would help address the challenges that militate against the growth of enterprises in the sector.
The SME sector, which constitutes about 90 per cent of all businesses in the country, continues to suffer from inadequate access to finance, lack of markets and poor market information, inadequate infrastructure, obsolete technology and regulatory bottlenecks, among others and in the process its contribution to economic development is minimal.

The MSME project being jointly financed by the two private sector arms of the World Bank Group - International Development Agency (IDA) and the International Finance Corporation (IFC) - and government is expected to resolve these challenges by enhancing access to credit, support the development of infrastructure to allow market access and trade facilitation as well as help to improve the business environment.

The IDA is providing 45 million dollars, the IFC 40 million dollars while government will provide the remaining 33 million dollars to finance the project in the next five years.
Mr Kyerematen said the contribution of the SME sector was key to government's socio-economic development drive to attain a middle-income status with 1,000 dollars per capita by the year 2015.

The policy thrust of the Ministry, therefore, is the promotion, development and growth of vibrant, productive and competitive SME sector that generates sustainable employment, creates wealth and addresses spatial imbalance in development.

In line with the policy, Mr Kyerematen said various programmes and interventions such as technology improvement for SMEs through the enhancement of access to research and development infrastructure, harmonization and coordination of entrepreneurial development programmes to support existing enterprises and start-ups were implemented as part of the Trade Sector Support Programme.

Others are activities of various training agencies to enhance the managerial, technical and other competencies of SME operators and development of business incubators and establishment of industrial estates.

The rest include the enhancement of skills for policy formulation and analysis at the level of the sector Ministry and strengthening of SME support institutions such as National Board for Small Scale Industries, Ghana Export Promotion Council, EMPRETEC
as well as non-governmental organizations engaged in entrepreneurship and enterprise development.

Mr Kyerematen called for harmonization of various support programmes for SMEs being implemented by various agencies and development partners in order not to duplicate efforts.

Mr. Kwadwo Baah-Wiredu, Finance and Economic Planning Minister, said the launch was a significant step to the drive to achieve a middle-income status by 2015.

He said the government was implementing various measures to reduce the cost of doing business in the country, which was still on the high side.

Ms Imoni Akpofure, Country Director, IFC, said the institute is participating in the Access to Finance Component of the project, which comprises a Partial Credit Guarantee Scheme and IFC Line of Credit.
The IFC is committing 20 million dollars each for the two sub-components. Under the Partial Credit Guarantee Scheme to which the IFC has earmarked 20 million dollars, the Institute would share the financial risk of lending to SMEs equally with participating banks involved in the programme.

The IFC Line of Credit will be given to some commercial banks to enable them to offer longer term loans with durations of up to 5-7 years at the market rates currently prevailing in the country.

Ms. Akpofure said five banks had been short listed for consideration under the access to finance programme and two were expected to be able to offer services under the project within the next few months.

Mr. Tony Oteng-Gyasi, President of the Association of Ghana Industries, said the real potential of the SME sector had not yet been realized.

He called for integration of the informal sector to the formal sector to raise revenue and create employment