Credit guarantee for SMEs to expand as EXIM Bank readies for operation

Credit guarantee for Small and Medium Enterprises (SMEs) involved in export and import will be significantly expanded when the integration of three institutions to create EXIM Bank is completed in September, 2017.

“Credit guarantee business should expand with the integration. There will be a whole department at the bank providing guarantees for the SME sector for exporters and importers on the bank’s bigger balance sheet,” Felix Ntrakwah, Board Chairman, of Eximguaranty Company Limited, told the B&FT.

The EXIM Bank, which will operate as a universal bank but focusing on providing credit and credit guarantees to exporters and importers, seeks to drive economic growth with more emphasis on exports.

At the recent annual general meeting, Mr. Ntrakwah, noted that all parties involved in making EXIM Bank a reality: government, Export Finance Company (EFC), Eximguaranty Company Limited and the Export Trade, Agricultural Investment Fund (EDAIF) is committed to seeing EXIM Bank commence operation soon.

“There have been series of meetings, and I happen to be a member of the committee that is working on this. The management of EXIM Bank is very keen in bringing the companies together. I cannot say specifically when this will happen but it looks as if government is willing to see it happen as early as possible,” he added.

Performance of the company

Mr. Ntrakwah noted that Eximguaranty encountered several macroeconomic and operational challenges that heavily and negatively impacted on its performance.

Total guarantees fees earned declined by 9percent to GH¢1.3million, while that of investment income also dropped by 10.82percent from the previous year’s of GH¢4.1million to GH¢3.6million. compared to the previous year, total revenue also declined by 19.65percent.

The company recorded losses in both operating profit before tax and total profit after tax of GH¢280,000 and GH¢275,000 respectively. Also, total assets declined by 6percent with an outturn of GH¢16.8million as a result of net claims on the guarantee funds.

The company, however, did increase its number of guarantees issued in 2016 to 176 with a value of GH¢34.4million which was significantly higher than that of 2015 by 22.5percent.

“The escalating Non Performing Loans (NPLs), high cost of energy tariffs and lending rates as well as the refusal of COCOBOD to accept guarantees from Non Bank Financial Institutions (NBFIs) were some of the critical factors that affected our incomes,” he added.

In sounding optimistic, Mr. Ntrakwah, noted that the after reviewing the prevailing economic conditions and devised appropriate market driven strategies to take advantage of the opportunities in the economy, the board has subsequently given approval for management to execute a one year business plan.

He added that with COCOBOD rescinding its initial directive not to accept guarantees from NBFIs, it will impact positively on the company’s revenues and income especially in the area of Seed Fund Guarantee.



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