Greater Accra receives bulk of EDIF loans

Accra, Nov. 11, GNA - The regional distribution of project beneficiaries under the Export Development and Investment Fund (EDIF) scheme so far indicates that disbursement is skewed in favour of Greater Accra Region.

Out of a total loan of 181 billion cedis granted beneficiaries as at the end of October, Greater Accra Region alone obtained 102.5 billion cedis, representing 56.65 per cent of the total loan. In terms of projects, the region alone takes 46 out of the total of 77 projects. The next ranked regions are Ashanti and Central regions with projects accounting for 19 and 12 per cent respectively of total disbursement.

The Volta and Upper West Regions had no projects.

EDIF was established by an Act of Parliament in October 2000 to make available financial resources for development and promotion of Ghana's export trade. It became operational in March 2001.

Mr Kwabena Nkrumah, Director of Credit and Projects, EDIF, gave the breakdown at a review workshop on the facility in Accra on Tuesday. The stakeholders workshop is to identify problems hindering the smooth implementation of the scheme and find ways to enhance it.

Mr Nkrumah said since EDIF facilities are meant to support export trade, the Board would welcome a situation where all the ten regions of the country get actively involved in exports to qualify for the facility.

Mr Nkrumah urged entrepreneurs in the regions to take advantage of the scheme to boost exports since EDIF does not only assist big projects but also takes care of small and medium scale ones.

The sectors, which have received financing included shea butter, palm oil, salt, handicrafts, plastics, garments, fruit concentrates and wood products.

He appealed to the 16 Designated Financial Institutions (DFIs) participating in the scheme to educate their customers to enable them to take advantage of the lower interest rate on loans and long term recovery periods to boost their export businesses. EDIF loan attracts an interest of 15 per cent, which is far below the lending rate of about 28 per cent ruling in most commercial banks.

Mr Nkrumah said although a greater portion of loans granted are not due for payment yet, the overall loan recovery rate of 91.26 per cent recorded in some cases was encouraging.

He expressed worry about request for extension of moratorium periods for EDIF loans, saying that it gave the indication that projections made by the companies for which the facility were granted were unrealistic. He asked the DFIs to intensify monitoring of approved projects to minimise default so that the recovery rate could be higher even as the number of projects financed increases.

Answering participants' queries on delays in approving the credit facility, Mr Nkrumah said some of the DFIs did not follow the guidelines for the operation of the credit facility of the EDIF thus causing unnecessary delays.

Besides the stipulated time frame of 37 days allowed in the EDIF law for decision on applications is unrealistic since DFIs and EDIF would have to go through various approval processes before the applications are finally granted.

Mr Nkrumah expressed the hope that EDIF would work to minimise the factors, which cause delays and urged the DFIs to do the same to ensure that decisions are taken on applications in good time.