The German Investment and Development Company (DEG) has targetted investment in the country?s manufacturing sector.
?We are looking to invest about ?30-40million within the next three years in the country?s manufacturing sector. We are currently working closely with a local manufacturing firm that we would like to invest in,? Mr. Andreas VoB, Regional Director, West Africa, DEG told the B&FT in an interview.
DEG?s disbursement of funds over the past couple of years has covered the financial sector, telecom industry, and power plants in the energy sector as well as agriculture and agro-processing.
The firm attributes its lack of investment in the manufacturing sector in the past to the stunted growth of the sector, high operational costs, such as high cost of power and access to cheaper short-term credit.
?Manufacturing in West Africa is not doing well, but we hope to invest a significant stake within the coming years to support the sector,? he added.
The firm has signed a US$5million subordinated loan agreement with UT Bank to aid the bank expand its support to Small and medium Scale Enterprises (SMEs) in the country. This follows an initial US$10million equity investment received by UT Bank last month from DEG, which gives the German firm a 12.5% controlling stake in UT Bank.
?SMEs are a major engine of economic growth, particularly in developing economies. It is a major aim of DEG to facilitate access to capital for these enterprises. UT Bank has exhibited a tremendous track-record over its relatively short term of operation as a banking institution and contributed to the growth of the SME sector in Ghana,? Mr. VoB said
Mr. Karl Weinfurtner, DEG Director for Africa, said the loan agreement is to ?strengthen UT Bank to play a lead role in promoting growth of the SME sector. It also shows that we have confidence in the management of the bank.?
Mr. Joseph Nsonamoah, Board Chairman of UT Bank, said the transaction ?is the beginning of our strategic partnership with DEG. The new loan will reinforce the capital position of the bank and help us meet the high demand for medium-term funding to SMEs in the country.?
Mrs. Pearl Esua Mensah said the bank will continue to support the SME sector, which is considered as the engine of growth.
DEG commits both debt and equity investments, and sometimes intermediary or bridge financing arrangements, in profitable projects across the regions with the ultimate goal of contributing to sustainable development by helping the private sector to create jobs and reduce poverty.
By Dominick Andoh
