The Ministry of Finance and Development Planning or MFDP in collaboration with GN Bank Liberia Limited and BRAC has signed a grant worth US$4.8 million to strengthen the capacity of Liberia’s private sector financial institutions and banks to lend profitably to Small Medium Enterprises or MSMEs.
Speaking at the formal signing ceremony on Friday, 25 August in Monrovia, Finance and Development Planning Minister, Boima Kamara, says the agreement will access a US$4.8 million grant from the World Bank to also make funding available to MSMEs on sustainable terms, while strengthening the capacity of Liberia’s private sector financial institutions and banks.
He says the recent deadly Ebola virus seriously hinders the country’s activities, including small businesses, adding, “So what could we do to fast track the economy to put back those businesses on track, we thought to bring back the supporting facilities to keep them on track.”
He points out that the government was constrained through the Central Bank how to increase access to affordable finance, and it is against this backdrop that government started negotiation with the World Bank, which is one of the many efforts to identify with smaller businesses by making finance available thru partners.
According to the Minister, this is not going to be a Monrovia driven initiative. “We are also going to deal with micro finance and non-banking institutions as a way of saying how are we seeking to improve access to finance and mainstream financial sector requirement, so that all of the vetting process that will take place in this facility will be followed to ensure that the money will be payback.”
“Today’s signing is the culmination of months of efforts by MFDP, the Central Bank of Liberia, and the World Bank to conduct due diligence and lay the foundations for strong grant management”, the Minister Kamara stresses.
He says that the MFDP, CBL, and the World Bank assessed the capacity of each participating institution to ensure they are ready to administer the MSME Rural Finance project, and that all participating financial institutions have been found to meet stringent eligibility criteria to which they would be held throughout the program’s lifetime. “We even expect them to strengthen their controls and performance through this program.”
Kamara notes that participating institutions will be responsible to conduct due diligence on sub-credit recipients and to monitor the portfolio’s health, emphasizing, “This initiative is truly important because, particularly in a market like Liberia, inclusive economic development is about more than simply access to credit. To spur growth and real job creation, lending must also be about targeting financing solutions to the needs of MSME businesses.
The minister cited as an example, loan terms and duration, particularly in the agricultural sector, and helping it to grow. He says MSMEs are drivers of economic activity and innovation in Liberia’s economy, explaining that, “They are collectively the largest employers we have, outside of government. Access to financial service can boost job creation, raise income, reduce vulnerabilities and increase human capital investments.”
He reiterates government’s commitment to the initiative and to supporting financial sector reform and development more broadly, noting that Liberia needs a fully functioning, developed, and stable financial sector to economically prosper.
“We are committed to working to ensure that our citizens and businesses have access to financial services to meet their income generating and household needs. I am optimistic that, with the partnership of the World Bank and Central Bank, this new financial inclusion project will help steer Liberia’s financial sector development in the right direction, and more importantly, stimulate economic growth and development for Liberians.”
GN Bank Deputy Managing Director for Operation, Mr. Kweku Bio, expresses joy over his bank joining this network, and vows to use it in every part of Liberia so that those that are in need of the facility can access it, but stresses “these loans are suppose to be paid back so when they are disbursed customers are suppose to pay back to allow others to benefit.
By Lewis S. The-Editing by Jonathan Browne