Budget Review; Govt silent on SME Fund

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The Small and Medium Enterprise (SME) fund to be set up by the government as outlined in the 2014 budget is yet to kick start, one year on.

The fund, which was to start on a pilot basis was expected to mobilise and deploy GH¢50 million from sources such as Export Development and Agricultural Investment Fund (EDAIF), as well as pipeline and new loans and grants including financing from development partners.

However, after the presentation of the 2015 budget which made no mention of the SME fund, the Finance Minister told a section of the media after a post- budget sensitisation programme for the Regional Budget Officers in Accra that the SME fund was yet to materialise pending discussions on a US$1.5billion facility from the China Development Bank (CDB).

The workshop was to further explain issues on the 2015 budget to the various information officers from selected districts.

“The SME fund, if you recall, was part of the CDB facility; but you know that we have put a cap on the CDB. We are having discussions with them, the cap is on US$1.5billion and at the moment they are disbursing about US$1 billion, so if we conclude with them, the additional US$500 will include the SME facility, otherwise you have to look for money from other sources,” he explained.

SMEs have been the bulwark of creating jobs and mobilising the informal sector. However, funds created to address their limited access to financing and reducing the cost of borrowing have not been sustainable.

The SME Fund was to have formal links with established domestic institutions such as EximGuaranty Company and the Venture Capital Trust Fund, as well as rural banks and micro-finance companies. It was also to collaborate with the National Board for Small Scale Industry (NBSSI) to facilitate the unification of several SME finance and capacity-building initiatives under one umbrella.

Mr Terkper said it was not true that the government had been silent on the fund.

“We reported on it when we presented a statement to Parliament on the CDB facility. It doesn’t mean we don’t have other SME policies. If you go to the Ministry of Trade and Industry, there are updates of programmes that continue to facilitate SMEs; we also spoke about microfinance and how to improve them,” he explained.

He said SMEs and microfinance companies played a significant role in the economy, and as such the government, through the Ministry of Finance, continues to implement programmes geared towards the improvement of the sector.

“The Ministry implemented the recommendations of the Financial Sector Strategic Plan Phase II (FINSSP II) 2012-2016 with a view to deepen, broaden and strengthen the financial sector. In that regard, the Ministry established the Ghana Alternative Market (GAX) on the Ghana Stock Exchange (GSE) to provide a window for SMEs to access the capital market and introduced the cash-upon-service system (no cash no premium) for the insurance industry to address the issue of insolvency. In addition, the Bank of Ghana established the Department for Other Financial Institutions Supervision (OFIS) to supervise microfinance institutions,” he said.

Initiative to promote SMEs

The 2015 budget stated that next year, the Rural Enterprises Programme (REP) will establish 95 new Business Advisory Centres (BACs) to provide business development services to SMEs at the district level, the budget outlined.

“In addition, 30,400 rural poor people will be provided with skills training in community-based income generating activities, small business management and marketing. Furthermore, 16,500 operators of rural, micro and small enterprises will be given all-year-round business counselling services,” it further added.

source : Graphic Online