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01.06.2005 Business & Finance

EDIF reduces lending rate

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Accra, June 1, GNA - The Export Development and Investment Fund (EDIF) Board on Wednesday reviewed downwards its maximum lending rate from the current 15 per cent to 12.5 per cent per annum. The Designated Financial Institutions (DFIs), which participate in the loan scheme and bear the credit risk for the transaction, would still retain 10 per cent of the new maximum rate of 12.5 per cent. The DFIs are provided with loans from EDIF at a minimum interest for on lending to Exporters.

Mr Timothy Obeng, Chief Executive of EDIF, told a press conference in Accra that the decision to reduce the rate borne by the Exporter was a response to the falling trend in interest rates as shown in the Bank of Ghana's cut in the prime rate from 18.5 per cent to 16.5 per cent. Besides, the move is to enhance the competitive position of the Ghanaian Exporter in the market.

Mr Obeng said the Fund, which was set up to provide financial resources for development and promotion of the export trade of the country, had so far committed 325.7 billion cedis in loans under its credit facility account to the Export Sector.

In addition, the fund had also made available about 65 billion cedis for 102 projects in areas of product development and promotion, market research, capacity building, among other things in support of export-oriented areas.

Mr Obeng said loan recovery rate from beneficiaries was appreciable and was currently pegged at about 80 per cent. He said the Fund was constantly monitoring the beneficiaries to ensure that the grants they received were strictly applied to the approved projects.

Mr Obeng said the financial situation of the Fund was healthy, adding that the Board was exploiting other avenues to boost the fund for on lending to Exporters.

The EDIF now relies heavily on levies of 0.5 per cent on non-petroleum imports.

Mr Clement Duodu, an official of ECOBANK, said the reduction in the interest rate would further enhance the DFIs ability to deal with more Exporters, whose applications would have attracted less attention from the banks.

He said the low cost of funding was in the right direction since it was only through exports that the country could generate the needed foreign exchange to carry out its development programmes. Meanwhile, EDIF has signed agreements with six beneficiaries totalling 3.3 billion cedis for various projects.

The beneficiaries include the Food and Drugs Board, Crop Research Institute, Federation of Ghanaian Exporters (FAGE) and Ghana Export Promotion Council.

The Reverend Jonathan Martey, Head of Quality Control of FDB, said the Board would use the 920 million cedis granted it to import a High Performance Liquid Chromatograph (HPLC) to help perform analysis on such exports as palm oil to ensure that they met international standards. Mr Fred Adongo, Chief Executive Officer of FAGE, said it would establish an Export Resource Centre to provide data and market information and train Exporters. 01 June 05

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