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12.10.2004 Business & Finance

Ghana Missing From IFC Radar

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Ghana is conspicuously missing from the scheme of activities of the International Finance Corporation (IFC), a member of the World Bank Group.Since 2002, IFC, which deals mostly with the private sector, has not made any investments in equity or loan to any of the country's private sector companies.

IFC's mission is to promote sustainable private sector investment in developing countries by participating in the operations of the private sector to ensure its growth and development through equity, structured finance, risk management, loans syndications and loans.

The last investment made in 2002 by IFC in the country was in Diamond Cement Ghana Ltd and Ghana Printing and Packaging Industries, producers of pulp and paper products. The lack of investment of IFC in the country's private sector must be due to weakness of the sector itself as a result of the smallness of companies in terms of capitalisation, poor infrastructure, market growth and penetration.

According to IFC Report for the year 2004 firms also lack the necessary resources and capacity to sponsor projects that, in project size and capitalisation, meet IFCs norms for direct financing in Sub-Saharan Africa.Countries that have taken the best part of IFC facilities in Sub-Sahara Africa include Nigeria, South Africa, Mozambique, Cameroun and Kenya.

IFC recently invested nearly $100 million in MTN, Nigeria's mobile telecommunications company to help improve the communications network in Nigeria. MTN, one of Africa's leading cellular companies, owns some 75 per cent of MTN, Nigeria.In Kenya, IFC made new investments in a major soda ash company, a flour Mill, in Mozambique, a hotel operation in Mali and textile exporting company in Madagascar.

Furthermore, IFC has supported the sustainable development of Africa's natural resources through expansion of a ferrochrome mine in South Africa and $18 million in equity financing for Mozambique-South Africa gas pipeline.

As a result of most firms not meeting the IFC investment criteria, IFC is establishing a different product mix, involving both investment and non-investment services. It is therefore working with the International Development Association (IDA) to launch a comprehensive programme targeted at micro, small and medium enterprises.

The proposed programme aims to reduce constraints to growth and competitiveness by increasing access to finance, helping firms and new markets by building their technical capacity and reducing regulation to enable more private sector participation.

One of the key resources for capacity building of IFC is its Africa Project Development Facilitiy (ADPF) under which financial assistance was extended to medium-scale enterprises.To make that facility effective, IFC is piloting a new model for delivering its services to smaller businesses through SME solution centres.

Each centre will be an integrated "storefront" services and financing SMEs including short and long-term finance, capacity building, access to information and approaches to improving the business enabling environment.

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