ADB Strengthens Commitment To SMEs

The Agricultural Development Bank (ADB) committed a total of GH¢156.85 million as loans to various categories of Small and Medium-scale Enterprises (SMEs) by the close of 2011, a release issued by the bank recently has noted.

The figure marks a 42 percent increase in the asset book of ADB’s SME Unit from GH¢110.40 million recorded in 2010. The growth thus underscores the fact that the industry and market place have responded positively to the activities and operations of ADB’s SME Unit.

Steve Kpordzih, Managing Director of ADB, commenting on the development, said the growth of Ghana’s economy no doubt lies in the growth and development of the private sector and most especially the strengthening of SMEs.

“Consequently, ADB’s SME asset book points out the importance to which ADB attaches to the industry. As a result, asset-wise, the ADB’s SME portofolio contributes to 37 percent of total corporate banking assets and 24 percent of the total bank’s asset.”

The introduction of products by ADB for SME owners has increased accessibility of credit to SMEs. In addition, ADB has served its SME customers with other innovations and programmes to help the steady progress and development of SMEs with innovations such as local purchasing order (LPO) product programs, interim payment certificate/invoice discounting/factoring product programs, stock and collateral management arrangements and a series of self-liquidating short term loans as supplementary working capital for operations.

The bank’s quest to support SMEs is further strengthened in the division of the bank’s SME portfolio into two – small and medium. The classifications are made to distinguish the various SMEs and to offer specialized terms of credit to each category. For liabilities/deposits, the SME (small) should have annualized credit turnovers between GHS100,000.00 to GHS1,000,000 and GHS1,000,000.00 to GHS6,000,000.00 for SME Medium. For assets, both small and medium SMEs should be between GHS30, 000 to GHS2, 000,000.00 being one third of the annualized credit turnover.

Other Services offered by ADB’s SME Unit include cash collection, trade finance (L/C, bills), funds management, structured short term loans, bridging loans/ODS, term loans, contingent liabilities including performance guarantees, advance mobilisation guarantees, bid/tender bonds and bank guarantees for suppliers’ credit, among others.