German DEG lends UT Bank $5m to boost SMEs in Ghana
UT Bank Limited has received a capital boost of $5 million as a subordinated loan from the German Investment Corporation (DEG) to support Small and Medium-sized enterprises (SMEs) in Ghana.
The loan is aimed to contribute to the increasing access to medium term capital for SME’s and help them capitalise on opportunities created by Ghana’s strong economic growth.
The DEG this year acquired a 12 per cent stake in UT Bank following an investment of $10 million equity in the bank.
The deal follows a similar one in April with the International Finance Corporation (IFC), which had invested a total of $30 million, equally split in equity investments and Loan and Trade Finance Facility.
With the new capital injections, UT Holdings Limited shareholdings will whittle to about 41.6 per cent from the current level of 61.11 per cent while IFC and DEG will together account for about 32 per cent holdings.
UT Bank during 2011 saw net profit rose to GH¢13.065 million from GH¢9.300 million in 2010 while total assets grew by 38 per cent to GH¢712 million from GH¢517 million in 2010.
Gross loan portfolio stood at GH¢499 million, an increase of 45 per cent over the previous year, attributable to increased loan disbursements.
Loan disbursements almost doubled to GH¢408 million up from GH¢210 million in 2010 with the SME sector accounting for 57 per cent of the loan.
Speaking at the signing of agreement by the two institutions, Mr Andreas Voss, Regional Director of DEG pledged the continuous support of the business entity to UT Bank to help strengthen its capital base and expand access to credit to SME business.
He lauded the Bank for its tremendous track record over its relatively short term of operation and its contribution to the growth of the SME sector in country.
He said SMEs were a major engine of economic growth in most developing countries saying “SMEs are too small to be taken into account by commercial banks and too big for being considered by micro-finance institutions”.
“It is major aim of DEG to facilitate access to capital for these enterprises.
“This financing gap needs to be closed. Development finance institutions like DEG stand ready to scale up SME finance by giving entrepreneurs the necessary support by providing innovative approaches,” he stressed.
Mr Voss observed that the strengthening of partnership with Ghana was very critical to ensure that smaller businesses realise their growth plans and have a bigger impact on the economy.
Mr Joseph Nsonamoah, Chairman of the UT Bank Board of Directors said the initiative marked the beginning of UT Bank’s strategic partnership with DEG, adding that the loan would help reinforce the capital position of the Bank to meet the high demand for medium term funding to SMEs.
He assured the Banks commitment to assist SMEs with the support of DEG since SMEs reduces unemployment and also act as key drivers of the economy.
He commended the hard work of UT staff and Serengeti Capital Partners who acted as Transaction Advisers to UT Bank and Bentsi-Enchill and Letsa & Ankomah who were the Legal Advisors.
DEG is a subsidiary of KfW Banking Group, one of the largest European Development finance institutions for long-term project financing.
Source: GNA