The World Bank’s Board of Executive Directors has approved a $20 million loan for Ghana under the Regional Trade Facilitation Project. The funds will be used to facilitate investments and trade flows led by the private and public sectors in the country.
The loan, which is an Adaptable Program Loan (APL 1), was approved on Tuesday June 14, 2011 in Washington.
According to the World Bank, the project which is in its second phase will also facilitate productive activities through the provision of insurance, coinsurance, reinsurance, financial instruments and other related services.
“The project aims to facilitate private sector-led trade flows, investment and productive activities through the provision of insurance, coinsurance, reinsurance, financial instruments and related services,” the World Bank stated.
The project has only one component which is to provide a financial facility that pools the capital contributed by African Member States (AMS) through their subscription in Africa Trade Insurance Agency’s (ATI’s) share capital, the World Bank said.
Led by the World Bank’s Task team leader, Archondo Sherri Ellen, the Bank said ATI is the implementing agency.
In terms of allocation of the funds, the Bank indicates that Regional integration will receive 33%, International financial architecture getting 17%, 33% going into Trade facilitation and market access as well as 17% invested to export development and competitiveness.
These funds enable ATI to underwrite insurance policies to cover short-term to medium-term political risk as well as comprehensive credit insurance for private sector buyers, non-honoring of sovereign obligations or guarantees, and trade cover for sub-sovereign obligors, said the World Bank.
“In addition, the financing may be used by ATI to fund budgeted operating costs, eligible investments, and share repurchases as well as insurance facility related payments.”
The project is expected to end by April 30, 2017, the Bank noted.
In the terms of condition, The World Bank stated that the maturity period is 35 years and grace period of 10 years.
Neighbouring West African country, Benin, was also given a $7.5 million grant to undertake the same project, the Bank said.
By Ekow Quandzie