The government’s plan to develop the industrial sector through its flagship program; one district-one factory (1D1F), may suffer major setbacks as the Bank of Ghana has written to some banks in the country not to accept guarantees issued by Ghana EXIM Bank to support businesses to enable them access credit facilities from financial institutions.
According to the Central Banks, with the exception of Guarantees from Multilateral Development Banks (MDBs), all other Guarantees do not qualify as eligible collateral under Section 62(9) of Act 930.
The issuance of Guarantees by Ghana Exim Bank is similar to what all other Exim Banks and Export Credit Agencies (ECAs), do to either facilitate access to credit by businesses from commercial banks or safeguard repayment for a business transaction.
According to sources, such a directive to the banks is likely to affect the credibility of Ghana Exim Bank both locally and internationally. Its full effect would be felt by the various SMEs who do not have adequate collateral, to access credit from commercial banks worldwide.
It is very important to note that every guarantee institution is accepted based on the credibility of its Guarantee Certificate, therefore anything that seeks to tarnish the credibility of such institutions is to be avoided.
The objective of the Ghana EXIM Act, Act 911 is to support and develop direct and indirect trade between Ghana and other countries, and also build Ghana’s capacity and competitiveness in the international marketplace.
Ghana Exim Bank supports businesses directly through credit facilities, and indirectly through Guarantees and other financial instruments, business advisory services, research, etc.
The companies that Ghana EXIM Bank has referred to banks for credit facilities to be backed by Ghana Exim Bank’s guarantee include those who have already benefited from EXIM bank’s guarantee cover which would not be affected in any way by the directives from Bank of Ghana because of the credibility of the Guarantee Certificates.
Ghana Exim Banks works with all commercial banks in Ghana, although has signed MOU with 10 selected banks, as well as international banks and financial institutions.
The Banks is currently on a guarantee application in favour of an international financial institution, and therefore any pronouncement that seeks to attack the credibility and validity of the Bank’s Guarantee Certificate presents a dire consequence for SMEs trying to access credit facilities from such institutions using guarantees from Ghana Exim Bank.
For the year 2022, the bank has worked on 17 guarantees to the tune of GH¢347.4 million. This resulted in GH¢468million credit facilities from commercial banks to businesses.
Ghana Exim Bank is a member of international bodies including the Berne Union which has a membership of Exim Banks, Export Credit Agencies and the Investment Insurance Industry.
Such Exim Banks’ include very credible institutions like the Export-Import Bank of the United States, The Arab Investment & Export Credit Guarantee Corporation, Export Development Canada, Denmark’s Export Credit Agency, The Saudi Export-Import Bank, China Export & Credit Insurance Corporation (Sinosure), UK Export Finance (Export Credit Guarantees Department), etc.
Ghana Exim Bank was a creation by the Parliament of Ghana through the enactment of Act 911.
Ghana Exim Bank was established through the merger of the Export Development and Agricultural Investment Fund (EDAIF), Eximguaranty Ghana Company Limited (EGCL) and Export Finance Company Limited (EFC).
Before becoming part of Ghana Exim Bank, EGCL has since 1994, been issuing Guarantees to commercial banks in Ghana for the purpose of serving as collateral to enable SMEs to have access to credit from these banks.
In creating Ghana Exim Bank, EGCL became a critical arm of the bank to underwrite credit facilities from banks through the issuance of Guarantees. Exim Banks all over the world, as part of their mandate, underwrite loans from banks through the issuance of Guarantees.