$17m Microfinance fund launched, (Friday, March 5, 2010 Page 47)

A US$17 million microfinance fund aimed at making access to capital
easy for small and medium enterprises (SMEs) and micro-entrepreneurs
was launched in Accra.

The fund, to be known as the “Goodwell Africa Fund”, is a partnership between JCS Investments Limited, a social investment company, and Goodwell Microfinance Development Company, an international for-profit business development company.

The fund, which is the first equity microfinance fund in Ghana, would be invested in the entrepreneurial microfinance institutions (MFIs)with the goal of creating a substantial social impact and attractive financial returns.

Launching the fund, the Director of Microfinance at the Ministry of Finance and Economic Planning (MoFEP), Mr Kobina Amoah, said the multi-faceted nature of using microfinance as an instrument for wealth creation required an integrated effort by all stakeholders.

He said in that regard, the government, in partnership with other support institutions and development partners, had been engaged in creating an environment that promoted microfinance as a strategy for wealth creation and poverty reduction.
This, he stated, had “led to a remarkable growth in the number of microfinance institutions in the country”.

Mr Amoah said although reforms in the financial sector had resulted in the expanding and increasing competition in the commercial banking sector in the country, credit and other financial services going to the agricultural sector and the rural population remained very low.

He explained that the inadequate funding was because “the services of the traditional commercial banks have not been well suited to the needs and risk profiles of farmers and operators along the
agricultural value chain”.

Mr Amoah commended the JCS and its partner for the initiative, saying if the objectives of the fund was pursued vigorously, it would support government’s effort at wealth creation and poverty reduction.

Ms Els Boerhof, a representative of Goodwell Investment BV, in a presentation, stated that there existed a microfinance potential in most parts of Ghana and Nigeria, her outfits target markets in the West African sub-region, which remained under-served, adding that because of inadequate funding for the microfinance sector, 80 per cent of demand in the sector was not met in the two countries.

She said studies conducted into the microfinance sector in the two countrie indicated that more than US $500 million was needed instrengthening the sector.
Ms Boerhof said besides financial support, the microfinance
institutions would be offered technical support.

The Chief Executive Officer (CEO) of the JCS Investments Limited, Ms Patricia Safo, who also double as the funds manager, said the fund would go a long way towards supporting the needs of businesses that found raising of capital rather difficult.
She said beneficiary entrepreneurs would also receive management training from her outfit to ensure proper management practices.

The occasion was also used to launch a MFI Directory, which contained the contacts of credible microfinance companies in the country.

A website, www.rffab.com, with the objective of linking businesses and entrepreneurs seeking funds, was also launched.

According to experts, the microfinance sector in the country is with many challenges as it presently operates without specific policy guidelines and regulations. The situation, partially accounts for the snail-pace at which the sector is growing.

Efforts aimed at addressing the challenges confronting the industry which include poor regulatory environment, poor institutional linkages and lack of linkages between formal and informal financial institutions have also not been coherent.


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