afrol News - Line of credit for Ghanaian CAL Bank

Ghana
Line of credit for Ghanaian CAL Bank

afrol News, 25 January - The African Development Bank (ADB) and the CAL Merchant Bank of Ghana have signed, under the ADB's private sector window, a line of credit of 5 million US$ and a technical assistance support for capacity building to CAL. The project is to strengthen private sector finance in Ghana, ADB informs.

Mr. Theodore NKODO, Vice-President of the African Development Bank (ADB) in charge of North, East and South Operations, and Mr. Frank Adu, Managing Director and Mr. Alexander Williams, Secretary of CAL Merchant Bank of Ghana, signed on Tuesday, December 17 2002 at Accra, Ghana, under the ADB's` private sector window, a line of credit of 5 million US$ and a technical assistance support for capacity building to CAL Merchant Bank of Ghana. This project is in conformity with the Bank's private sector operations policies and new Vision regarding private sector development.

According to Theodore Nkodo, ADB Vice-President, the line of credit would "enable CAL to grant its best clients medium-term loans to finance mostly export oriented projects in the manufacturing, mining, telecommunications, construction, leasing, insurance, tourism and service sectors."

Further, the technical assistance component of the project was to be used for capacity building of CAL staff in Risk Management and Management Information Systems. CAL is said to be "a young and dynamic merchant bank, very innovative in product development," according to Mr Nkodo.

The proceeds of the line of credit were to finance capital equipment including permanent working capital required to create new production capacities and to expand/modernise existing facilities.

According to an assessment by ADB, the line of credit would also "contribute to poverty reduction in Ghana, as the sub-projects to be financed will create about 400 new job opportunities in the construction, manufacturing, transportation, mining and agro/food processing industries." Poverty reduction effects largely are seen as a condition to obtain ADB credits and grants.

Mr Nkodo said the loan further would "facilitate the expansion of the production facilities of recently privatised public companies and in so doing, encourage further privatisation of public sector enterprises."

By providing a commercially and competitively priced line of credit to CAL and endorsing its creditworthiness, ADF said it was "playing a catalytic role in strengthening CAL's capability to raise capital from the international capital markets in the future at competitive rates, as well as fostering and encouraging a vibrant private sector and the orderly and efficient development of the capital market in Ghana."