The Association of Ghana Industries (AGI) has initiated what an Industrial Development Fund to support members to overcome funding challenges.

Officials say the fund aims at addressing limited opportunity in the financial market for businesses, especially small and medium enterprises that continues to stifle business growth.

According to the AGI, Businesses have had to bear the brunt of short-term loans with high interest rates, considered a disincentive to growth of the sector as a critical part of the national economy.

“One of the biggest challenges facing industry and SME is affordable credit, and even if the credit is affordable, the cost is so deterring if you have a situation where banks are lending to SME’s at 35 per cent plus, it’s a challenge,” said James Asare Agyei, President of AGI.

Early 2013, the association announced the establishment of a development bank, and officials say the proposed fund is a prelude to realizing that dream.

Mr. Asare Agyei revealed, “With industry, if you have such credit levels, high interest and short term, you cannot apply such credit to expand businesses, retool and be competitive”.

The AGI will not give a hint of how much seed money has been made available but says the Fund will get support from sources like the Venture Capital Trust Fund and Pension Fund.

“Once you demonstrate commitment, you will have like-minded funds coming in to support,” he said.

Government last year promised an SME fund of about 50 million Ghana Cedis. Mr. Asare says this is another avenue the association is looking forward to tap into.

“Government must show commitment in also supporting the AGI fund by putting in some money especially from the promised SME fund,” he stated.

Experts have often said that the only way to grow the economy is to ensure small and medium scale enterprises are well resourced, and given the needed medium to long term capital.

SME constitutes about 70 per cent of its membership.

“We can increase our production capacities, what we call the economies of scale if we have the needed funds,” Mr. Asare told LuvBiz at the 17th regional Annual General Meeting of Ashanti and Brong Ahafo AGI Chapter in Kumasi.

Members voted to elect new executives for the chapter.

Newly-inducted leadership of the Ashanti and Brong Ahafo zonal branch of the Association of Ghana Industries is promising members an end to credit access gap.

The association is negotiating with Dutch-based not-for-profit organization, PUM Netherlands, to assist members with credit at zero interest.

PUM has been providing advisory services to small businesses in developing countries for over thirty years.

Zonal President of AGI, Afua Gyamfua Owusu-Akyaw, is confident the move will strengthen local businesses.

“I want the group to be very vibrant so that members can work with the needed confidence,” she said.

The executives have other plans for AGI, including training staff with pragmatic skills.

“We have to be united in advocacy, there are a lot of challenges facing the AGI but because we are somehow somewhat divided we are unable to forge forward our concerns,” she revealed.

She says her tenure of office will see the association present itself more creditably to the government.