THE AGRICULTURE AND AGRO-PROCESSING CREDIT FACILTY
The Agriculture and Agro-processing Credit Facility,(i.e. the Agriculture Credit Facility) can be accessed through Designated and Financial Institutions(DFls). Funds from this facility can be accessed for loans, refinancing and credit guarantee through Designated Financial Institutions to persons in the agroprocessing sectors of Ghanaian economy.
Eligible applicants under this facility are:
- Farmers of agricultural produce relating to agro-processing.
- Marketers of agriculture produce relating to agro-processing
- Marketers of locally processed agricultural produce for the domestic market
- Investors undertaking an infrastructural project to provide services for agriculture and agroprocessing entities.
- An aggregator facilitating production from out-growers to agro- processors.
- Eligible companies or enterprises or enterprises shall be wholly owned by Ghanaians or partly owned Ghanaian majority shareholding.
*Appointment of Designated Financial Institutions (DFIs)
- The Board shall in writing designated the financial institutions which shall grant credit facilities made available to them by EDAIF
- Appointment shall be for two (2) years and renewable on satisfactory performance.
- Measurement of performance shall be based on time taken for processing applications and responsiveness to loan recovery among other factors
- In the event that a DFI is suspended or terminated for unsatisfactory performance, the DFI could be re-instated when it proves to EDAIF that it has rectified or taken steps to rectify the causes leading to unsatisfactory performance.
*How Does One Apply?
- An applicant shall submit a request on the prescribed application form together with a technical and financial proposal an a comprehensive business plan to a DFI of his choice. A copy of the completed application form and the required documentation shall simultaneously be lodge with EDAIF.
- All Designated Financial Institutions shall use the application form approved by EDAIF. The application shall be given to applicants in triplicate.
- Application forms and a checklist of basic requirements which will make an application complete can be obtained from the following sources:
* EDAIF web site, www.edifgh.org
* EDAIF secretariat in Accra.
* EDAIF office in Tamale
*Designated Financial Institutions (DFIs).
* Appraisal Process
- DFIs shall undertake the necessary due diligence, preparation and appraisal and make recommendation to EDAIF for funding;
- In case where a DFI maintains a line of Credit with EDAIF, the DFI shall make the decision on the application and notify the Fund;
- A person, enterprise or company that has defaulted in repayment of other similar credit facilities shall not qualify for an EDAIF loan
- On receipt of an application from a potential beneficiary, a DFI shall acknowledge receipt of the application within seven (7) days from the date of receipt
- Appraisal, evaluation and provisional approve or otherwise of an application shall be made within a period no exceeding twenty-two days by a DFI submitted to EDAIF for consideration
- On receipt of an application from a EDAIF,DFI shall conduct a short due diligence to ensure the application meets the eligible criteria, etc., within seven(7 ) days
- Appraisal projects/application shall be submitted to management then to the Board Committee on Agriculture and Agro-processing Development and Credit within ten (10) working days from the days of receipt of the application from the DFI
- EDAIF shall within twenty-one(21) days after receipt of an application considered by a DFI, give its approval or otherwise ensuring among other things ,compliance with the objectives of Fund
- The Board â€˜s decision shall be communicated to DFI within five(5) days of Board decision
- The DFI shall communicate approval or otherwise of the application to applicant, stating the terms and conditions of the credit facility and a copy of the approval letter shall be submitted to EDAIF.
- In the offer to a successful applicant, the DFI shall express or state that EDAIF has the right to inspect itself or jointly with of the DFI, any aspect of the project/business and any relevant records and document. Even without any written communication by the DFI to this effect, the right of EDAIF shall remain unimpaired
- Applications for refinancing shall follow the same process as outlined above
2.2.5 Disbursement i.Funds which shall be made available to applicants shall be granted as loans by EDAIF to DFIs who DFIs who shall bear the full credit risk; ii EDAIF shall lend to the DFIs at an interest rate of 2.5% p.a. and DFI shall on lend to the beneficiaries at a maximum interest rate of 12.5%p.a. giving the DFIs a spread of 10.0%p.a. These rates shall be reviewed from time to time; iii. For the purpose of the loan recovery and other payments EDAIF shall maintain an account with each DFI to be known as EDAIF Special Repayment Account; iv. A loan agreement shall be executed between EDAIF and DFI on the loans that shall be granted to it V.DFI shall in turn execute loan agreement with sub â€“borrowersâ€™ .Copies of the agreement must be submitted to EDAIF; vi. Release of funds by EDAIF shall be by signatories duly authorized by the Board and which shall be circulated to the Controller and accountant General Department, Bank of Ghana and the DFIs in advance; vii Except as otherwise decided by the Board in exceptional cases ,all approved projects shall be disburses in tranches consistent with an agreed implementation schedule and progress of work; viii. EDAIF reserves the right to re-allocate or cancel a loan facility that remains unutilized by a DFI for a maximum period of twelve (12) months; ix.The DFIs shall ensure the disbursement of approved funds to beneficiaries within one(1) week of the Fund disbursing it to the DFI and; x. Notice of the credit advice must be forwarded to EDAIF by the DFI. 2.2.6 . Tenure of Facility and Moratorium. An agriculture or agro â€“processing credit facility shall be granted for: .A long term period exceeding five (5) years; .A medium term period not exceeding five (5) years; or .A short term not exceeding twelve (12) months. Moratorium period on the repayments of loans shall be based on the cash flow of the sub-borrowers i.e beneficiaries. 2.2.7 Approval Limit The maximum that can be granted to a single borrower shall be the Cedi equivalent of U.S $3,000,000.00. Any facility that is more than that shall be considered by the EDAIF Board on its merit in consultation with the Honorable Minister of Trade and Industry. 2.2.8 Security For small and micro enterprises, landed property on other traditional collaterals like cash, equity, treasury bills and other securities may de-emphasized. Rather, emphasis shall be given to nontraditional collaterals including personal guarantee, from Exim guaranty Co. (Gh) Ltd, contracts, credit guarantee, risk insurance, accounts receivable and key person insurance as the DFI may decide. 2.2.9 Credit Guarantee The Fund shall collaborate with credit guarantee institutions by providing funds to augment their guarantee fund. This is to enable such institutions to provide the needed guarantee to borrowers in the agriculture and agro-processing sectors. 2.2.10 Monitoring i. DFIs shall visit/inspect each project periodically as agreed and written reports shall be made to EDAIF; ii. EDAIF shall visit/inspect each project either by itself or jointly with DFI at least once a year. iii. Beneficiaries shall be required to submit quarterly operational reports to DFIs and EDAIF on a prescribed form. EDAIF, however, shall have the right to request for information directly from beneficiaries when necessary. iv. Quarterly progress meetings shall be held between EDAIF and each DFI for the purpose of sharing information, reviewing and monitoring the implementation of approved project, loan recovery and resolving obstacles to efficient utilization of the fund; and V. EDAIF shall appoint Auditors t audit DFIs with respect to the loan granted to them by EDAIF. 2.2.11 Repayment i. The DFI shall repay to EDAIF the amounts corresponding to any repayment effected by a beneficiary to the DFI on credit receive from the DFI. If any part of credit is repaid to DFI in advance of maturity, the DFI shall promptly notify EDAIF and shall repay to EDAIF the amount involved; ii. The DFI shall pay into the EDAIF Special Repayment Account, principal repayments and the portion of interest due to EDAIF which the DFI receives from the beneficiary; iii. No beneficiary shall be penalized for repaying a credit before maturity; and iv. The DFI shall adopt effective procedures for the recovery from the beneficiary or credit on which there is delay or default in payment. 2.2.12 Reporting i. The DFI shall submit report to EDAIF in respect of the following: i.Funds from EDAIF allocated to the DFI. ii. Funds disbursed to each beneficiary and application processing period. iii. Status of project implementation and disbursements (in tranches). iv. Loan repayments. v. Interest accrued on disbursed amounts and balances on the undisbursed funds allocated. vi. Funds received and remitted into EDAIF Special Repayment Account. vii. Economic activities and development impacting on the implementation of the programme. 2.2.13 Terms and Conditions of DFI Contract with Beneficiaries The DFI in the loan agreement shall be entitled to: i. The right to require the beneficiary to carry out the project or use the loan with due ii. The right to require that the beneficiary take out and maintain with responsible insurers iii. The right to obtain all such information as the EDAIF and DFI shall reasonably request iv. The right to suspend or terminate the right of the beneficiary to the use of the proceeds of diligence and efficiency and in accordance with sound technical, financial, environmental and managerial standard and to maintain adequate record and account. adequate insurance against such risks associated with the execution of the project or other use of the loan. relating to the foregoing and to the administration, operations and financial conditions of the beneficiary and the benefit to be derived from the credit. the credit upon failure by such beneficiary to perform its obligations and its contract with DFI. 2.2.14 General Provisions i. The DFI shall authorize EDAIF, as long as there exist payment obligations in favour of EDAIF in respect of the implementation of the Loan Agreement, to demand automatic settlement of the outstanding balances with the DFIs ii. If the DFI default on any of its obligations under the Agreement EDAIF may suspend temporarily or permanently the DFIâ€™s participation of the credit scheme and demand recovery of the outstanding balance. iii. EDAIF may jointly with DFI, supervise the implementation and operation of the approved project and if EDAIF or the DFI finds that beneficiary had not utilized the credit as agreed upon, the EDAIF shall consider the obligation as cancelled and shall proceed to recover amounts disbursed and outstanding, together with appropriate commercial interest and pay back to EDAIF the corresponding amount. This is without prejudice to any action that EDAIF/DFI may take against such a borrower. v. The right of EDAF in this respect shall be stipulated in subsidiary Agreement which the vi. All modification, amendment, additions or deletions to this subsidiary agreement shall be in vii. This Agreement shall terminate as soon as the obligations contracted by each party have DFI would have concluded with the beneficiary with a copy to EDAIF at the time of the execution of the loan. writing and signed by both parties and shall be made only with the prior approval of EDAIF. been completely executed and the total amount of funds received due to EDAIF have been paid.