MOTI seeks additional funding for Rural Enterprises Programme

The Ministry of Trade and Industry (MOTI) has requested for an additional loan of US$40 million from the International Fund for Agricultural Development (IFAD) to finance the Rural Enterprises Programme (REP). The loan amount, however, has a grant element of 57.8 percent, with the remaining 42.2 percent attracting a zero percent interest. It has a moratorium of 10 years and a repayment period of 30 years.

The additional funding is expected to create 50,000 new jobs with 36,000 entrepreneurs also envisaged to have access to business development services which will be provided by Business Resource Centres (BRCs). 20,000 enterprises are also expected to upgrade from survival to normal and rapid-growth businesses. Overall, the programme seeks to ensure that 45,000 enterprises are in operation after three years.

This was disclosed when officials of the MOTI and the Ministry of Finance met the Parliamentary Select Committee for finance.

Rural Enterprise Programme

The REP is part of the government’s efforts to reduce poverty and improve living conditions in rural areas. Phase One of the project was implemented between 1995 to 2002 in 13 districts in the Ashanti and Brong Ahafo regions. The second phase (from 2003 to 2012) was implemented in 66 districts nationwide.

Due to the contribution of the programme towards poverty reduction and its role in boosting local economic growth, the government agreed with IFAD the and Africa Development Bank (AfDB) to expand the scope of the project into a nationwide programme and also extend its implementation time frame from 2012 to 2020.

The government has, however, decided to further extend the programme to 2022 taking cognisance of the depth of its industrial transformational agenda. In view of this, MOTI, through the Ministry of Finance, submitted a request for additional funding of US$40 million from the IFAD to finance the consolidation and scaling up of the programme.

Target population

The programme is geared towards benefiting the rural entrepreneurial poor that are able to convert the capacity-building support from the programme into productive assets with or without additional investments. It is expected to be implemented in all rural districts nationwide and will upgrade the entrepreneurial skills of target beneficiaries.

Credit assistance to clients

The participating financial institutions are also expected to extend additional credit to REP clients and will contribute to the cost of training their  staff. Beneficiaries will also provide in kind or cash contributions towards the programme and also contribute to their own business investments.

The committee expressed concern about the phenomenon where concessionary loan facilities were given out to poor rural folks by participating financial institutions at exorbitant interest rates, thereby causing many to default in repayment. The committee, therefore, advised the two ministries to ensure that credit facilities granted to rural entrepreneurs under the programme were given on soft terms so as to aid the profitability of their businesses and their ability to repay the facilities.

Financing plan

As to whether the IFAD facility would cover the entire cost of the programme, officials of the MOTI answered in the negative and explained that the the IFAD’s  concessional loan constituted only 62 per cent of the required additional funding.

The remaining 28 per cent would be contributed by other stakeholders such as participating financial institutions, programme clients and participating district assemblies. Others are the National Board for Small Scale Industries (NBSSI), GRATIS, and the government of Ghana.

Source: Daily Graphic: https://www.graphic.com.gh/business/business-news/moti-seeks-additional-funding-for-rural-enterprise-programme.