The Association of Ghana Industries (AGI) and a German crowdfunding platform, frankly.green, has teamed up to provide alternative source of cheap financing to businesses in the country, especially climate-smart ones.
Frankly.green seeks to finance projects or companies with a strong positive impact on the environment such those whose activities generate renewable energy, reduce pollution of air, water and soil, contributes to the protection and restoration of ecosystems.
Some of the projects that can easily qualify for this type of funding are projects that improve industrial processes and cleaner production, solid waste management, recycling, sustainable transport, sustainable and climate-smart agriculture, biosphere and ecosystem conservation, and water supply, saving and conservation.
Commenting on this model of financing, CEO of AGI, Seth Twum-Akwaboah, said this type of financing comes as a solution to the biggest problem of many entrepreneurs, namely, access to cheap finance, which he says will be a game-changer for small businesses.
“The interesting thing about this type of financing is that it is collateral-free. You hardly get financing arrangement that has no collateral requirement. It is a major problem for most entrepreneurs and so if they are saying that you don’t need a collateral before you qualify, then it is an interesting project.
In terms of the financing thresholds, I have had experiences where products of this nature come and they are asking for big funding especially when it is coming from outside. But this one has reduced the threshold so much that between 100,000 to 300,000 euros, you can apply. So it makes it a typical SME project because there is a lot of flexibility in it,” he said in an interview with the B&FT during the launch of the project in Accra.
He further stated that the AGI will remain committed to helping its members secure financing options that are cheap, hence, its partnership with the German-based organisation.
“For AGI, our critical objective is to solve the needs of our members. And one of the critical needs of most of our members is access to finance. If you look at our business barometer report, access to finance and cost of finance have been on the radar all these years. And that is why when we heard about this, we signed an MoU with them just to get our members to apply for it,” he said.
Portfolio Manager for Wangara Green Ventures, a local partner of frankly.green, Renald Appiah, urged small and medium businesses to take advantage of the opportunity that the German-based organisation is offering in order to accelerate their growth.
He added that companies should not shy away from applying as each company will be examined on a case-by-case situation and not the general criteria.
Applications, according to a statement from frankly.green, are assessed against the overall creditworthiness of the borrower and the financial viability of the project. The loans will be granted and repaid in Euro, with a loan tenor of up to five years. The required funding size should be between 100,000 and 300,000 Euros.