A 22-million Euro credit line to support growth of Small and Medium Enterprises (SMEs) and enhance their contribution to the country's development was launched in Accra on Tuesday. Known as the Ghana Private Sector Development Fund, the credit facility made available by the Italian Government would allow beneficiary SMEs to finance capital goods, spare parts, consumable production inputs and services. The agreement also provides for viable start-up companies. This is the second phase of the project initiated in 2003 to provide a lifeline to SMEs to foster economic development and reduction of poverty in the country. An amount of 10 million Euros out of the facility, was fully disbursed between 2003 and 2008 with 29 SMEs in the agro-processing, construction, mining, auto services and health related services, benefiting from the first phase of the project. The loan of 20 million Euros has an interest rate of zero per cent with a moratorium period of 20 years and a repayment period of 36 years. Ghana Government is bearing all exchange risks connected with the credit. The remaining two million Euros is a grant component and would be used to assist the businesses in preparing and implementing their business plans as well as for capacity building. To be eligible for the facility, SMEs must be wholly Ghanaian owned and must be part of the production or of the service sector as well as not make use, directly or indirectly, of child labour. The total level of support for each SME would vary between 25,000 and 550,000 Euros in local currency to be channelled through local financial intermediaries. Beneficiary SMEs are mandated to purchase 70 per cent of their supplies from Italy while the rest 30 per cent could be obtained from local sources. The credit agreement, which was approved by Parliament on December 4, 2003, however, excludes SMEs, which operate in the farming sector, harm the environment or deplete natural resources, make use of child labour or have direct or indirect link with military activities, wood working, furniture production and tobacco processing. Speaking at the launch, Ms Hanna Tetteh, Minister of Trade and Industry, said the development of a vibrant private sector was key to the achievement of growth, expansion and diversification of the economy. She said government's vision was to create a nation of innovative entrepreneurs, adding that the SME sector was critical to the accelerated economic development and growth agenda of the country. However, the meaningful contribution that SMEs could make to economic growth was being hampered by access to credit, acquisition and application of appropriate technology, logistics management, low productivity, distribution and marketing. The government, she said, would continue to dialogue with all stakeholders to build and sustain conducive business environment for the development of the private sector. Ms Tetteh expressed the hope that beneficiary SMEs would keep to the schedule of repayment in order to guarantee the sustainability of the financing scheme so that others could benefit from it. Mr Fabrizio De Agostini, Italian Ambassador to Ghana, said the programme would promote co-operation between the private and public sectors to develop local initiatives at district levels and create new clusters of development. Source: GNA