Following the successful implementation of the Project named “Ghana Private Sector Development Fund”, financed by the Italian Government in 2003 for a total amount of 11,000,000 Euro, the Italian Ministry for Foreign Affairs (MAE-DGCS) approved in December 2007 additional financial resources of 22,000,000 Euro (approximately 45 million GHC) in order to continue to support the effort of the Government of the Republic of Ghana to promote private sector development.
The new phase of the Project, implemented in collaboration with the Ghanaian Ministry of Trade and Industry, consists in two main components: a loan component of 20,000,000 Euro, used to establish a credit facility in favor of Ghanaian private Small and Medium Enterprises (SMEs), and a grant component of 2,000,000 Euro, which covers the operational costs and the technical assistance activities of the Project.
Beneficiaries of the Credit Facility shall be only Ghanaian Small and Medium Enterprises which fulfil the following eligibility criteria:
- The ownership of the enterprise must be 100% private;
- The enterprise must be part of the production or of the service sector (i.e. farming activities are not eligible);
- The production activity of the enterprise must not harm the environment (i.e. wood processing activities are not eligible);
- The enterprise must not make use, directly or indirectly, of child labour;
- The operation of the enterprise must not have any direct or indirect connection with military activities or weapons (including sporting fire arms, defence systems, military installations, military equipment and materials), tobacco processing and luxury goods.
In order to be considered eligible for the Credit Facility, the supply contracts shall have the following characteristics:
- The total aggregate value of the supply contracts, for which the financing is requested by a single SME, must not be lower than EURO 25,000.00 equivalent and not higher than EURO 550,000.00 equivalent.
- Each supply contract may include capital goods, spare parts, consumable production inputs and services thereto connected
(like design, training, construction works, after sale services, etc) and may include also construction works.
- The total aggregate price of the contracts, for which a financing is requested by a single SME, must be relevant to goods and
services of Italian origin for a quota not lower than 70%. The remaining 30% of the total aggregate price of the contracts can be related to the supply of goods and services (or construction works) of local origin (from Ghana or neighbouring Countries) including not more than 5% of the total aggregate price of the contracts for raw materials and/or semi-finished goods for manufacturing relevant to the investment. The quota of 30% that is not tied to supplies of Italian origin can be part of contracts established with Italian suppliers or can be related to contracts established with suppliers or construction company from Ghana or from neighbouring countries.
- The supply contracts must not include: (i) goods and services related, directly or indirectly to military activities, (ii) luxurious items and, (iii) goods that are not in conformity to the international rules on environmental protection and on workers’ safety.
The Local Financial Intermediaries to channel the Credit Facility to the beneficiary SMEs are all the Ghanaian-based Commercial Banks and Leasing Companies that satisfy the laws and regulations of the Republic of Ghana, provided that they sign a Framework On-lending Agreement with the Bank of Ghana.
In re-lending the loan received by the Bank of Ghana to an SME, the Financial Institution may make use of its own format, provided that the re-lending conditions to the SME are not less favourable than the following:
- Interest rate to SME between 9 and 12% per year;
- Repayment of principals in a period not less than 5 years and not exceeding 8 years after the communication from the Bank of Ghana of the final allocation of the contract/s to the Soft Loan. For leasing companies, the repayment period can last between 2 and 7 years;
- The repayment period for principals shall include a grace period which must be related to the reasonably expected time necessary for the delivery of the goods to the beneficiary SME and, where applicable, for the constructions works and commissioning; the grace period shall not exceed 2 years (for banks) or 1 year (for leasing companies).
A Facility Management Unit (FMU) has been established in order to facilitate the implementation of the Project. The beneficiary SMEs will have the responsibility for the identification and formulation of sound proposals for investment suitable to be financed through the Credit Facility. During the preparation of their proposals, the SMEs may request the advice of the FMU and its support in the preparation of the business plan. Similarly, the Financial Institutions will have the full responsibility for the evaluation of the requests for financing, but may request the advice of the FMU for the appraisal of the proposals.
The FMU can be contacted at:
Italian Cooperation Office – Ghana Private Sector Development Facility N. 90 Sunyani Avenue, Box KDPMB 12, Kanda – Accra, Ghana
Tel. +233-21-230117/237352/028-9555942, Fax +233-21-235452, Email: gpsdf@SDsdf.com