SMEs to benefit from HFC agreement

By Bernard Yaw ASHIADEY

HFC Bank says it will boost lending to its small and medium-enterprise (SME) and mortgage segments with the acquisition of a US$10 million credit facility from Proparco, the private wing of French agency Agence Française de Développement (AFD).

The bank is a key player in the mortgage market in Ghana with more than 20 years of lending experience. It also holds a strong position in the SME market, which represents 60 percent of its portfolio.

“This facility is to enable us finance SMEs and our mortgage business,” said Asare Akuffo, Managing Director of the bank, at the signing of the loan agreement in Accra.

“Since the SME sector has been identified as a strong sector of the economy, we will continue to invest heavily in the sector with the acquisition of this facility.”

Regional Director of Proparco in West Africa, Julien Lefilleur, said he was happy to sign the agreement because it represented a step forward in building stronger bonds with Ghanaian businesses.

“We are very happy to sign this deal with HFC Bank. We hope this partnership will be the beginning of better things ahead.

“Due to the sound management, quality of development impact and outstanding presence of HFC in the SME sector, we decided to do business with this bank,” he said.

SMEs form about 80 percent of enterprises in Ghana, but find it hardest to borrow cheaply since banks and other financial institutions take the view that the sector is a very risky area to put money into.

Banks also often point to the high cost of mobilising funds to finance their lending operations as reason for their expensive interest rates. The loan, according to HFC, is the first to a financial institution in Ghana by Proparco and will be repaid in a period of eight years.

French Ambassador, Frédéric Clavier, speaking at the signing, said Ghana is the country where Proparco and the AFD operate most even though both have a presence in other West African countries. He said he hoped Proparco would become an equity partner in HFC.

“For France, Ghana is a high priority in our diplomatic partnerships. We are defining new steps with the Ghanaian government to develop several key areas to grow the economy. France is ever ready to help in the development agenda of Ghana.”

In 2011, AFD granted €239million to the government, GRIDCo and three private institutions.