Accra, Aug. 17, GNA - Sinapi Aba Trust, a financial non-governmental organization, is to disburse 3.6 billion cedis to farmers in the Brong Ahafo; Upper East; Upper West and the Northern Regions under an agreement signed on Thursday with Venture Capital Trust Fund (VCTF), a fund set up by the Government to support small-scale and medium-scale enterprises.

About 1,200 sorghum farmers in the Atebubu, Wa, Tamale and Bolgatanga would benefit from the amount to plant the crop for local use.

Nana Osei-Bonsu and Alhaji S. S. Saakar, Chief Executive and Board Member, respectively of the VCTF, signed for the Trust while Mr Tony Fosu and Professor Sam Afranie, Chief Executive and Board Chairman, respectively of Sinapi signed for their institution. This is the first agreement signed by VCTF since its establishment by Government in 2004.

Nana Osei-Bonsu said the agreement with Sinapi was based on an investment option to provide credit facility directly to the NGO to lend to umbrella farmer organizations, cooperatives, groups or individuals business people or directly to the farmers to produce up to an estimated 1,600 tonnes of sorghum for the period 2006 to 2007. The VCTF operates two pay back initiatives, namely credit and equity, for recycling to other investment companies. Under a credit investment, the credit must be repaid but for the equity, the VCTF investment would be liquidated by selling the Trust's equity holdings back to the original owners of the company or other partners at the time of exit.

Nana Osei-Bonsu said for the Sinapi agreement, the credit would be paid back but the farmers had the added advantage of a ready market for the 1,600 tonnes of sorghum to be purchased by Guinness Ghana Breweries Limited (GGBL).

He also said the Sinapi programme involved assistance from Technoserve; GGBL, a consortium of European NGOs and Financial Agencies made up of the Common Fund for Commodities; Inter-Government Group on Grains and the European Development Corporation, which would together help to develop local supply of sorghum to replace the imported barley used by the brewery companies in Ghana.

The assistance from the institutions is estimated at 2.8 million dollars for a period of five years during which Technoserve would provide funds and technical assistance. Guinness would provide ready market and handle the pay back of the credit with the European NGOs also providing technical assistance including land preparation.

Nana Osei-Bonsu explained that apart from the ready market, GGBL had committed to set aside the amount for the repayment of the credit extended by Sinapi to farmers before any payments were made to anybody else.

"GGBL is not only the buyer of the crop but also provides finance and technical assistance to prepare the land for production," Nana Osei-Bonsu said.

"In view of GGBL's deep involvement in the various stages of the project, we do not anticipate any problem from Sinapi Aba to recover its investment."

Nana Osei-Bonsu said the VCTF attached importance to its responsibilities of investing money in SMEs and developing and promoting the private sector venture capital industry and would soon unveil its various activities.

The Fund has since its inception mobilized 22.5 million dollars from the reconstruction levy collected from the banking sector. However, the levy comes to an end in 2007 and the Trust Fund has geared itself to explore other avenues of raising more funds.

Deputy Minister of Finance and Economic Planning, Professor George Gyan-Baffour said the establishment of the Fund was a manifestation of the Government's objective of making the private sector the engine of growth of the economy.

He said the Fund would use various models to reach out to SMEs in areas such as Agbogbloshie in the Greater Accra Region and the Suame Magazine in the Ashanti Region and other smaller groups at the lower end of the industrial spectrum.

The Minister said the disbursement of the Fund for this particular project would help the country to save foreign exchange, which would otherwise have been used to import barley grains for the breweries. He urged the Fund Managers and the beneficiaries to set a positive tone for future transactions to ensure effective management of the funds.

Giving a background of the NGO, Prof. Afranie said apart from being the pioneer recipient of the Fund, Sinapi was one of the lead financial NGOs with 11 years of existence in Ghana.

Prof. Afranie said Sinapi, which had about 42,000 clients, had stuck to good operational performance, recording a recovery rate of 99 per cent and extending assistance mostly to women who constituted 92 per cent of the total clients.

He said Sinapi intended to deepen their services to rural people and that the agreement would help to achieve that feat that would also go a long way to create jobs, increase the incomes of beneficiary farmers and improve their livelihood.