Management of the Ghana Export-Import Bank (GEXIM Bank) has engaged eight banks in a collaboration that is expected to improve access to credit through guarantees to facilitate projects particularly government’s One District One Factory (1D1F) initiative.
The agreement between the GEXIM and the various selected banks is expected to be ready by the second quarter of 2020, as GEXIM has confirmed there are several applications from the selected banks, as well as referrals from the GEXIM itself.
The eight banks will accordingly establish a partnership with GEXIM through an MoU to agree on the parameters within which the lending should be done.
Speaking to the Goldstreet Business at the end of the two-day engagement, Head of Guarantees and Insurance, Ghana Exim Bank, Mrs Priscilla Budu, said: “the collaboration is in two folds where the banks bring their customers who don’t have enough collateral and the Exim Bank sends referrals to the banks as it has thousands of applications”.
Currently, the Ghana Exim Bank gives eight percent interest rate, with the banks charging as high as 22 percent to 25 percent interest.
That creates huge disparities as Exim Bank does direct lending at a concessionary interest rate contrary to commercial rates from the banks.
However, Mrs Budu believes the quest by the Exim Bank to guarantee all referrals to the banks, would enable commercial banks to reduce their interest rates.
“There are customers with bankable projects who don’t have enough collateral and for that matter, are turned down by the banks. Credit guarantee to customers as top up to their collateral will surely enable them to gain access to the funds as the banks would fully be aware that EximBank will pay in case of defaults” she explained.
This, according Exim Bank, would offer enormous opportunity for bankable projects especially those that falls under 1D1F to take off.
Since its inception in 2017, government had said there are 58 factories currently operational under its One District, One Factory policy initiative.
With the existence of 254 Metropolitan, Municipal and Districts across the country, there is clearly more to do to ensure that each district has a factory under the policy.
Source: BusinessZone Online