The Government of Ghana and the African Development Foundation (ADF), a US government agency, yeserday signed an agreement establishing a four-million-dollar annual Venture Capital fund to provide resources to support small and medium size Ghanaian businesses. The Fund is meant to support a minimum of 40 Ghanaian businesses for a five-year period.

Mr. Yaw Osafo-Maafo, Finance Minister, signed for Ghana, while Mr. Nathaniel Fields, President of the ADF, signed for the Foundation. He said the Government was providing a counterpart fund of two million dollars from part of the National Reconstruction Levy, thereby ensuring that four million dollars was in the fund at the beginning of each year.

A selected SME is expected to receive 250,000 dollars and would be developed to become a full-fledged company capable of listing on the Ghana Stock Exchange.

Mr. Osafo-Maafo said the Fund would virtually end the problem of accessing long-term financing by micro, small and medium scale industries that were usually faced with banks' unwillingness to provide credit on the grounds that their risks were too high.

He said SMEs in the country had for too long, lived on loans adding, "no company can survive on loans from banks." Similar financial arrangements exist between the ADF and governments of Zimbabwe, Uganda and Zimbabwe. The ADF would collaborate with the National Board for Small Scale Industries and EMPRETEC to work out selection criteria.

Mr. Kwamena Bartels, Minister of Private Sector Development, said the Fund was coming at a most appropriate time to fill a gaping hole in the finances of a large number of SMEs. "It will also enable them to have leverage for further funding," he added.

Mr. Fields said 15 African countries were participating in the Fund, which also provided technical support to make businesses more profitable. He expressed the hope that Ghana would be the flagship for other African countries, and the ADF looked forward to a US-Ghana collaboration to build viable micro, small and medium scale enterprises.