Accra, Aug. 6, GNA - Ghana and Italy on Wednesday signed an additional 22-million Euro credit line to support the growth of small and medium scale enterprises (SMEs), following the successful implementation of a first phase of the project. The funds made available under the Ghana Private Sector Development Facility consist of a soft loan of 20 million Euros and a grant element worth two million Euros.

The Italian Ambassador to Ghana Mr Fabrizio De Agostini and Mr Kwadwo Baah-Wiredu Finance Minister signed the agreement. It is the second time the Italian government is making funds available to support Ghanaian SMEs. In 2003, it committed eleven million Euros to the project.

About 29 SMEs, mostly in agro-business, construction and hospitality industries, received between 97,000 and 450,000 Euros to finance their expansion plans and undertake installation of equipment to further their development activities.

Under the current deal, the soft loan of 20 million Euros will be channelled to qualified SMEs through local commercial banks and leasing companies to finance capital goods, consumables production inputs and services, as well as construction works.

The grant component is designed to facilitate the use of the credit through the activity of the project Management Unit, run by Italian and Ghanaian experts, which will assist the SMEs in preparing and in implementing their business plans. The grant will also finance technical assistance through initiatives of institutional and decentralised capacity building, ICT development, metal works and building of capacity of staff of the Ministry of Trade.

Mr Baah-Wiredu underscored the importance of the SMEs sector to Ghana's development and welcomed any initiative that would make it more vibrant and competitive.

The sector currently accounts for about 70 percent of all industrial establishments and generates about 85 percent employment. He said the focus of the credit would be to support SMEs in the Brong Ahafo and the three Northern Regions.

Mr Agostini said the Italian government was encouraged by the successes chalked in the first phase of the project and would continue to share its experiences in the SMEs sector with their Ghanaian counterparts. The loan will be repaid in 56 years with no interest.