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Business News of Tuesday, 7 June 2016

Source: Ghanaian Times

Ghana needs Project Clearing House - Minister

The Minister of Trade and Industry, Mr. Ekwow Spio-Garbrah has stressed the need for the establishment of a Project Development Clearing House (PDCH), to collate projects which could not receive funding from the commercial banks in the country.

The move, he said, was to address the current situation in which several projects by the private sector players fail due to lack of funding.

Mr. Spio-Garbrah, who disclosed this in Accra, when the West Africa Regional Investment Director of GroFin Fund, a development finance company, Gwen Abiola-Oloke paid a courtesy call on him, explained that the PDCH would collate the projects which were rejected by the banks and create a database for those projects.

The visit of Mrs. Abiola-Oloke, who was accompanied by Samuel Sedegah, the Investment Executive of GroFin Ghana, and Raymond Denteh, Senior Investment Manager, was to familiarise herself with the operations of the ministry and also introduce the Minister to GroFin Fund and some of the products and services of the company.

It was also to explore avenues which GroFin could help to support the private sector with funds to finance their business operations.

“There should be a mechanism to allow banks that do not fund a project to notify a clearing house about the project,” he said.

Mr. Spio-Garbrah noted the projects being rejected by the commercial banks could be viable if they receive funding support from the financial institutions, saying “in some cases some of these projects will just have to be merged “to tap on the benefit of synergy and ensure they succeed.”

The minister expressed concern about the high cost of credit, saying it was one of the biggest challenges facing the small and medium scale enterprise (SME) industry in Ghana.

Mr. Garbrah indicated that there was a mismatch between the financial products being developed by the banks and what the SME market needs.

Calling for long-term funding for the SME, he also stressed the need for the banks to “design products that meet the needs of the market,” he stressed.

He noted the short-term funding provided by the banks was not serving the needs of players in the SME sector.

For instance, he said players in the agriculture sector, especially those in the tree crop sector such as mango and cashew needed long-term funding instead of the current three-month credit provided by the commercials banks.

Mrs. Abiola-Oloke told the minister that GroFin Fund was a development finance company which engages in impact investment.

She said the objective of the company was to build a thriving SME sector, which is regarded across the world economy as the engine of job creation to create more employment for the youth.

Mrs. Abiola-Oloke said the GroFin Fund provides long-term capital for the players in the SME sector in sectors of the economy to grow their businesses, saying the company provides loans between $100,000 to $1.5 million to their clients.

Mr. Sedegah in his remarks said GroFin Ghana had impacted on more than 70 companies since 2010, stressing the company has so far disbursed $25 million to its clients in Ghana.