The World Bank, an international quasi-public bank, has committed USD 118.9 million to its Micro, Small and Medium Enterprise (MSME) project in Ghana. For the year ended June 2008 USD 3.21 million had been disbursed. The purpose of the project is to promote entrepreneurial activities within MSME as it comprises almost 70 percent of the Ghanaian workforce. The World Bank’s Country Director for Ghana, Mats Karlsson, has said: “Growth and employment in Ghana are directly linked to the growth of MSMEs …. Ghanaian banks will be more able to link up to Ghanaian businesses for more investment and private sector jobs.” The project will be administered by local World Bank staff.
This project is aimed at improving the competitiveness and employment levels in MSMEs through financial and private sector development, improvements to regulation and competition policies and support of MSMEs. This will be accomplished by improving access to finance for MSMEs and improving access to markets by reducing trade barriers. Funding for the project comes from the International Development Association (IDA) (USD 45 million), International Finance Corporation (IFC) (USD 40 million) and another USD 32 million will be sought from “as yet unidentified foreign sources“. The Government of Ghana will also contribute USD 1.9 million. The funds will be disbursed as loans.
The World Bank cites two major outcomes of the project to date. Firstly, it reports that at the end of 2008 the project had achieved a reduction in time to register a business along with the time to import and export. Secondly, it reports that the project has created 2,081 full time jobs, according to a press release in the Ghana Business News, since inception in May 2007. By the end of 2010 it is estimated that 3,658 jobs will be created by this project in the garments, horticulture, construction, agriculture and tourism sectors. In addition to increased employment in these sectors it is anticipated that revenue will also increase.
Ghana was one of the top 10 African nations with the highest number of borrowers and savers according to the 2008 Africa Microfinance Analysis and Benchmarking Report. A MicroCapital Paper Wrap-Up summarizes this report. West Africa was shown to have a relatively low growth rate, indicating that its market was nearer saturation than other African regions. It was also reported that the region had the most clients served by deposit taking institutions and twice as many savers as borrowers. A recent CGAP (Consultative Group to Assist the Poor) report, ‘Diagnostic to Action: Microfinance in Africa’, provided information about the number of borrowers and savers. As at the end of 2006 Ghana had 630,000 borrowers (8 percent of the poor) and 3 million savers (36 percent of the poor). Ghana was one of seven countries which received 50 percent of total African funding from external sources.
A recent MicroCapital story reported on an investigation into the improper distribution of funds through the Ghanaian Micro-finance and Small Loans Centre (MASLOC), a joint project of the government and World Bank. It is alleged that proper procedures for distribution had not been used. No further details are available at this stage.
By Sally Levy, Research Assistant
Additional Resources:
Ghana Business News: Micro finance project generates 2,081 jobs in 2008
World Bank: MSME Project; Status of Projects in Execution FY08
“Africa Microfinance Analysis and Benchmarking Report, 2008,” by Jennifer Isern, Estelle Lahaye, and Audrey Linthorst, published by CGAP and MIX: December 2008.
MicroCapital Story: Government of Ghana to Investigate Disbursement of Microfinance Loans to Rural Women in the Country
Microfinance Paper Wrap-Up: “Africa Microfinance Analysis and Benchmarking Report, 2008,” by Jennifer Isern and Estelle Lahaye of CGAP, and Audrey Linthorst of MIX
CGAP report: Diagnostic to Action: Microfinance in Africa
NextBillion.net: Ghana: World Bank Supports Micro, Small And Medium Enterprises (msme) Development
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