06.10.2004 Business & Finance

SME Bank to be established

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Accra, Oct. 6, GNA - Mr Alan Kyeremanten, Minister of Trade, Industry and President's Special Initiatives (PSI), on Wednesday announced that plans were afoot to establish a Small and Medium-Scales Enterprises Bank (SME Bank) to adequately take care of the financial needs of SMEs in the country.

He noted that though SMEs provided a real anchor and base for the industrialization and economic development of the country, not enough attention had been given to its development and promotion, saying that the Government was now ready to establish a bank exclusively dedicated to providing long term financing and capital for SMEs.

The Minister said this in speech read on his behalf by Mr Francis Osei Kusi, Director of Investment and Finance at the Ministry, during the a press launch of a two-day SME Fair being organized by the Ghana Industrial and Commercial Estates Limited (GICEL), a subsidiary of the Social Security and National Insurance Trust (SSNIT), in collaboration with the Ministry.

The fair, slated for October 20 and October 21, 2004, is under the theme: "Small and Medium Scale Manufacturing as Catalyst for Socio-Economic Development" and is expected to attract about a 100 local SMEs, including 30, which are already located within the GICEL 26 hectare enclave at Weija.

The objective of the fair is two fold: First to facilitate the growth of SMEs, the main tenants of GICEL and secondly to get the several SMEs in the country, which do not yet have branches within the GICEL enclave to do so.

Mr Kyeremanten said it was estimated that SMEs constituted 70 per cent of all industrial establishments in the country, adding that it was also estimated that 85 per cent of manufacturing employment and to a larger extent overall employment growth in the country came from the SME Sector.

"The Sector contributes the highest percentage of industrial output and it also contributes significantly to overall export from the Non-Traditional Exports Sector - it creates jobs at relatively low capital cost and it is more resilient to external shocks such as foreign exchange fluctuations and inflation among other things," he said. He said despite the strengths of the Sector, multi-lateral financial organizations such as the World Bank, International Monetary Fund (IMF) and others had in the past kicked against the idea of establishing a bank to provide easy credit to the Sector for fear of non-workability of a recovery mechanism.

"We intend to establish in the SME Bank in the same fashion as the EMPRETEC Credit Sourcing Facility for SMEs, which the World Bank kicked against in the past, but now the facility is working very effectively with a record 87 per cent recovery rate."

Mr Kyeremanten said in spite of the fears and reservations the World Bank had expressed the Ministry was currently talking to several banks and other financial and industrial sector barons to assist in making the SME Bank vision a reality.

He said the focus of the Ministry was to develop a vibrant, productive and competitive SME Sector to provide the impetus for enhanced productivity and employment generation.

The Minister said ahead of the establishment of the SME Bank, a new SME Unit had been established in the Ministry to provide strategic direction and implementation support for the development of SMEs, adding that a number of programmes, including the Rural Enterprises Development Programme (REDP) and the Technology Improvement Programme (TIP) among other programmes were as in place to support SMEs to expand their operations.

Mr Kyeremanten announced that the Government was instituting a new programme, dubbed "Graduating Trade Barons into Captains of Industry", which would assist a number of successful trade barons, including market queens to identify business opportunities in the manufacturing sector so as to re-direct their efforts into the sector, adding that so far five of such persons have been identified and selected for the first phase of the programme.

Mr Kwesi Osei, Director-General of Social Security and national Insurance Trust (SSNIT), said it was in recognition of the significant contribution of SMEs to the development of the country that the Trust was teaming up with various agencies and institutions to get SMEs well organized and resourced economically to become more vibrant. He said the collaboration was aimed at addressing problems such as lack of basic infrastructure like electricity, water and good access roads, lack of technical support and know-how in areas of finance, administration, marketing and business planning and difficulty in accessing long term financing and raising capital for business start up and expansion.

Mr Osei said the fair would include an exhibition by the 30 identified SMEs located in the GICEL enclave as well as seminars and workshops, which would provide the opportunity for participants to increase their knowledge in technology, finance and marketing as well as other subjects related to the various aspects of SME manufacturing.

"It is hoped that ultimately the success of this initiative will create more employment opportunities for Ghana's growing population and consequently increase the contributor base to the Social Security Scheme," he said.

Mr Isaac Yaw Boama, Managing Director of GICEL, said the fair was the second to the first held in 2001, adding that, exclusive fairs for particular manufacturing industries within the GICEL enclave would be held every three months.

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