The period for receiving applications for the soft loan package being offered by government in collaboration with selected financial institutions – universal banks, savings and loans companies, rural and community banks and microfinance institutions – effectively ends today as the June 20 deadline is a Saturday.
However, it appears that applications may fall short of expected as only about 170,000 businesses had so far applied for the GHC1 billion stimulus package as at the start of this week according to the National Board for Small Scale Industries which is in charge of supervising the initiative.
The NBSSI at the start of the one month application period had stated that it expected between 200,000 and 230,000 micro small and medium-sized enterprises to benefit from the package, but, considering the number of applications as at the start of this week, the upper target seems unlikely to be met.
However, there is still some optimism that the target will be achieved after all since the number of applicants has gradually been rising over time since the start of the process. Indeed, in the first week, only 14,000 applications were received, but by last week the weekly number had quardrupled.
Government is putting up GHc600 million to fund the initiative and the selected financial intermediation firms collaborating in its execution are expected to put up about GHc400 million bringing the total funding to GHc1 billion.
Government’s portion of the funding will provide loans at just three percent per annum interest rate with a one year moratorium followed by repayment over the subsequent two years. The terms of the counterpart funding from the financial intermediaries partnering government will however be provided on closer to commercial terms but expectedly at the lowest rates they can afford considering their respective cost of funds.
To ensure that loan applications are received from all around Ghana, NBSSI staff and other stakeholders are conducting nationwide outreach and monitoring visits to selected trade and business associations and market centers across the country.
No upper limits or minimum amounts have been announced with regards to loan sizes. The size of each loan – or in some cases outright grant – will be decided based on need, circumstance and repayment capacity. To supervise the approval and disbursement process a loan committee has been established comprising one representative each from the Ministries of Finance and of Trade & Industry respectively; a representative from NBSSI; and a representative of the participating financial intermediaries. Reputed audit firm, KPMG has been appointed as technical advisors to the initiative.
Beneficiaries will be companies adversely affected by the economic challenges resulting from the COVID-19 outbreak and those who need additional capital for expansion in response to surging demand for their products and services created by the outbreak, The main sectors being targeted are: healthcare and pharmaceuticals; manufacturing; agriculture and agro-business including food and beverage producers; water and sanitation including PPE suppliers; tourism and hospitality; education; textiles and garments; commerce and trade; and other services.