German Development Bank enlarges portfolio in Ghana

Mr Andreas Voss, the Regional Director of DEG Mr Andreas Voss, the Regional Director of DEG

Strained economic conditions in the country are hampering the capacity of some small and medium-scale enterprises to access development financing from the country’s development partners.

The German Development Bank, DEG, which finances environmentally friendly and sustainable projects, has seen a slowdown of its disbursements to SMEs, one of the key sectors it focuses on, because the small businesses are not able to put together bankable proposals and designs to access their funds.

Mr Andreas Voss, the Regional Director of DEG, a member of the German development financier, KfW, told the Daily Graphic in Accra at a meeting organised by the Ghanaian German Economic Association (GGEA) that DEG’s 70 million euro portfolio in Ghana could go up this year but for challenges SMEs faced in designing projects.

In 2012, DEG’s portfolio in Ghana was around $70 million, but it added investments in two projects in renewable energy the following year.

Mr Voss interacted with the paper shortly after GGEA’s business breakfast meeting for the month of September on the theme: “Gaining a competitive advantage in a challenging economy: The Power of Strategy Execution”.

The event, which attracted captains and top executives of private sector concerns in the country with affiliations with European businesses, was to discuss and enlighten participants on how organisations can deliver on strategy by applying the Balanced Scorecard Methodology and by understanding the leadership qualities required to transform their organisations into strategy-focused entities.

Topics included: the Role of the Organisation’s Leadership in Strategy Execution, by Mr Edwin Provencal, Managing Director, Provencal and Associates; Strategic Workforce and how they matter in the overall organisational strategy execution by Mr Nii Amanor Dodoo, Senior Partner of KPMG and Translating Plans into Actions: The need for financial intermediaries, delivered by Mr Voss.

He said the SMEs also lamented that the lower than expected growth in the economy was impacting their business for the year, which was also hampering their potential to access financing from DEG.

“We have certain criteria which have to be met, but the small and medium businesses have capacity bottlenecks. The companies are suffering because the economic development is lower than expected,” Mr Voss said.

DEG’s portfolio has been growing phenomenally across Africa and currently stands at about €1 billion. The West African portfolio is standing at approximately 300 million euros, with Nigeria alone having about 170 million.

Ghana has a little more than 70 million euros of financing from DEG, covering eight projects.

They are also planning a couple of other projects in infrastructure and hospitality, estimated at about 40 million euros in total.

DEG was also the lead arranger for Fidelity Bank’s $60 million Tier Two syndicated facility agreement with a consortium of European Development Financial Institutions (EDFI), representing one of the development bank’s big ticket transactions for the year.

DEG itself provided $18.5 million subordinated loan to the tier two Fidelity Bank’s capital.

 

Challenges

Mr Voss said they did not have any challenge financing big projects because they were designed by experienced project managers.

However, financing some of the individual small and medium-scale projects came with challenges due to capacity in project design, as well as the impact of lower than expected economic growth on their businesses.

For his part, Mr Provencal said organisations could achieve sustainable growth and competitive advantage if they developed their intangible assets, which included human capital, information and data.

The CEO of Provencal and Associates cited a global survey conducted by The Palladium Group, a global management consortium, which revealed that although organisations knew their strategy very well and acknowledged the place of innovation in business growth, only a fraction actually practised it and innovated.

He, therefore, urged the participants to embrace the Balanced Scorecard, a management system, which would help them to cut waste, develop other segments of their business and gain competitive advantage.

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