A N15 billion($118.9 million) five-year initiative aimed at enhancing easy access to loans for small and medium scale enterprises in Ghana while also availing them with relevant skill development training has been launched by the government.
The programme to be financed by the World Bank is one of a ten pilot projects supported under the IDA/IFC joint MSME programme for Africa , is expected to be completed in December, 2011.
Unveiled in Accra by Alan Kyerematen, Ghana's Minister for Trade, Industry, Private Sector Development and President's Special Initiatives, the project provides a comprehensive range of integrated interventions to address the growth of micro, small and medium enterprise sector.
It seeks among other things to integrate Ghana huge informal sector into the formal sector. Targets include SMEs engaged in general business activities, non-financial service providers, policy advocacy groups, business associations, business development service providers, policy advocacy groups, business associations, development service providers and training providers.
Other expected outcomes include increasing the number of participating banks, and line of credit increase in SMEs loans in general; increase in productivity of SMEs, and establishment of common service facilitators for selected strategic sectors.
According to the Industry Minister, the project is the result of many months of intensive planning and preparation by several organisations and stakeholders, including the his ministry, the World Bank and other development partners.
The four component project is expected to trigger sectoral growth and reduce poverty and the mortality ratio of MSMEs in the economy. It hopes to do this by supporting entrepreneurial development; reducing business constraint faced by MSME; and building integrated market access and trade facilitation infrastructure.
The components of the project are access to finance; access to markets, trade facilitation and entrepreneurship development; business environment; and implementation, monitoring and evaluation. Under access to finance, five instruments which are expected to enhance SMEs access to bank loans have prioritised.
The instruments include, a partial credit guarantee programme that will provide risk sharing of 50 percent on default loss of participating financial institutions arising from lending to SME; and line of credit facility of funds to support loan schemes to MSMEs. The others are performance based technical assistance to the banks and to SMEs; and additional financial instruments.
On access to markets, trade facilitation and entrepreneurship development, the project will support selected activities. Under market access, a business development services fund will be established in addition to the provision of business services. Also, a web-based platform/National Product Gallery and industrial sub-contracting and partnership exchange are included.
For entrepreneurial development, an ICT park, furniture city, clothing technology and training centre, and projects involving the creation of common service centres will be set up to enhance the economic opportunities for MSMEs.
Other plans include improving business legislation; reforming businesses start-up procedures and regulations; streamlining the levying of local taxes on businesses; building the ministries, departments and agencies' capacity to serve private sector needs effectively. The last component of the project seeks to provide a proper performance framework for monitoring and evaluating the results at all levels of implementation of the project.
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