Accra, March 19, GNA- The ARB Apex Bank and the Eximguaranty Company Ghana Limited, have launched an initiative to boost the operations of the rural and community banks (RCBs) to facilitate lending to micro and small-scale enterprises.

Under the initiative, over 100 RCBs are building the capacity to use credit guarantee covers to expand lending to the agricultural and industrial sectors and to stimulate grassroots economic development.

The programme package, forms part of the 10th Anniversary celebrations of Eximguarantee Company which was established by the Bank of Ghana in 1994 as a private limited liability company to among other things facilitate increased utilisation of foreign credit lines to especially non-traditional exporters and to improve the liquidity of financial institutions.

As part of the programme implementation, ARB Bank and Eximguaranty organised a workshop in Accra at the weekend for managers and project officers of the RCBs, to expose them to in depth knowledge of how exim operates, the benefits to be derived from utilising exim portfolio credit guarantee schemes and the procedures and policies covering the scheme.

Mr Kwadwo Baah, Minister of Finance and Economic Planning, said in a speech read on his behalf that exim products were recognised worldwide, hence the need to introduce financial re-engineering to expose Ghanaians to the benefits of such innovations.

He said Government was making its policy on Golden Age of Business vibrant by boosting productive economic activity especially through the private sector.

Mrs Felicity Acquah, Managing Director of Eximguarantee said globally, credit guarantees had been widely adopted by development finance professionals to address difficulties faced by corporate bodies and small and medium enterprises in productive ventures.

" A major problem confronting such enterprises in most parts of the world is difficult in attracting finance from commercial banks," she said, adding: " This difficulty arises partly due to the inability of most enterprises to provide sufficient security that the loans will repaid and on time."

Eximguaranty has provided 100 billion cedis credit guarantee cover for Ghanaian businesses over the past 10 years.

Mr Emmanuel Kwapong, Managing Director of ARB Apex Bank said in a speech read on his behalf that the collaboration between the Bank and Eximguaranty was aimed at exploring the possibility of linking rural banks with eximguaranty to provide credit guarantee cover to assist the banks in extending credit to their clientele.

Mr Felix Ntrakwah, Board Chairman of the Eximguaranty said the Company was established at a time when most financial institutions were reluctant to extend credit to exporters whom they considered not to be credit worthy.

"The question of risk aversion has also affected adversely the utilisation of foreign credit lines. Whilst foreign capital inflows was badly needed for the resuscitation of the ailing economy, records show that the utilisation of available foreign credit lines had been slow and far below expectation," he said.

Mr Ntrakwah said the Eximguarantee Company had an effect of reducing the credit institutions exposure, explaining that when a bank was required to provide a guarantee for its customer, the bank risk exposure will be only 25 per cent of the amount involved since eximguaranty covers 75 per cent in case of default.

" In the case of local currency loans, a guarantee cover allows a financial institution to increase loan levels in relation to its network from 10 to 25 per cent, he said, explaining , " It thus enables the bank to reduce the extent of exposure to its risk assets".

Mr Fred France, Head of the Banking Supervision Department of the Bank of Ghana, said credit administration in the rural economy was very risky since borrowing is small while customers are dispersed. However he said rural banks were becoming more efficient and meeting customer needs.

Mr France said the new banking law had introduced pecuniary and custodial sanctions to check irregularities and other offences in the sector, but gave the assurance that the laws would be applied with circumspection.

Mr Joseph Adjei, Head of Operations at the Eximguaranty Company limited listed the shareholders of the Company as the bank of Ghana and Financial Investment Trust, 90.90 per cent holdings, Social Security and National Trust five per cent, the National Investment Bank, 2.28 per cent and the Trust Bank 1.82 per cent.

He said products and services of the company comprised bid bond, advance payment guarantees, performance bonds and seed fund guarantee. Mr Adjei said by 31 December 2004, Exim had issued over 1026 guarantees amounting to 215.2 billion cedis to financial institutions and government agencies on behalf of the small and medium scale enterprises.