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Ghana fund releases grant to boost SMEsMonday, January 25, 2016 > 09:33:13
(The Africa Report)
Ghana has set aside funds to support businesses that require long term investment, but cannot access short term loans.
The country's Export Trade, Agricultural and Industrial Development Fund (EDAIF) approved a tranche of 50 million cedis to set up equity fund targeting investment to small and medium enterprises (SMEs) that engage in agro-processing, export trade and industrial development.
Equity financing would be injected into agro-processing and extended to enterprises that trade in vegetables, fruits and juices, meat and dairy and edible oils. The agency's officials say it would also provide investments to start-ups, early stage companies and enterprises.
Funding would also be expanded to include those engaged in packaging materials, apparels, woodworks, handicrafts, paper and pulp as well as aluminium and metals.
Between August and December 2015, the EDAIF board approved financing facilities amounting to 52.3 million cedis to beneficiaries in the public and private sectors, the fund's chief executive officer Barfour Osei said.
The latest grant is made up of 20.3 million cedis in interest free repayable funds and 13.2 million cedis as credit for the purchase of equipment, tools and accessories for agro-processing and 5.7 million cedis in loans for rice, cashew and poultry production.
The remaining 13.1 million cedis would support EDAIF-sponsored cassava, which will receive 8.6 million cedis while 4.5 million will go into mango projects.
The Northern, Brong Ahafo and Ashanti regions are expected to benefit from phase one of the project.
The fund would also support the establishment of three processing factories and over 1000 beneficiaries are projected to get financial aid to cultivate nearly 4,000 acres of cassava to feed factories.
"Approvals for the Mango project covered maintenance of existing farms of over 5,000 acres and the cultivation of additional 2,800 acres across the country," Osei said in a statement.
In Ghana, readily available data on SMEs is scarce but statistics from the country's Registrar General's Department suggests that 92 percent of companies registered are micro, small and medium enterprises.
SMEs in Ghana are said to provide about 85 percent of employment and contribute about 70 percent to the country's Gross Domestic Product.
Industry players believe SMEs are exposed to greater opportunities than ever for expansion and diversification across sectors, attributing it to growing market size.
However, they are faced with absence of adequate and timely banking finance, limited capital and knowledge, non-availability of suitable technology, low production capacity, ineffective marketing strategies and lack of capacity to identify new markets.
They are also constrained by non-availability of highly skilled labour, bureaucratic delays and the complex maze of rules in following up with various government agencies to resolve problems.