US$70m boost for local content
Service companies in the mining and oil and gas sectors can apply for a share of a US$70million loan being provided by HFC Bank to enable them take on contracts from majors in the two sectors.
The facility is a syndicated credit between HFC and Afreximbank, which service providers can access as cash advances to pre-finance their contracts, or as confirmation of letters of credit or the issuance of guarantees on their behalf.
Briefing the service companies in Accra, HFC’s Director of Corporate Banking Osei Asafo-Adjei, said the companies can apply for a minimum of US$500,000 and a maximum of US$20million out of the revolving facility.
Interest on the loan is 4.5 percent — a rate Mr. Asafo-Adjei said is the lowest that companies can get in Ghana.
Although foreign companies registered in Ghana will be considered for the loan, Mr. Asafo-Adjei said the facility is “largely” for Ghanaian service providers in the mining and oil and gas industries who struggle to take on contracts in those sectors.
“The idea is to provide an affordable facility to enable particularly Ghanaian service providers to deepen their operations and increase capacity. We realise that one of the major challenges for Ghanaians in these sectors, which require a lot of resources, is that they do not have adequate funding. So we have put together this structure, which is affordable because it has about the lowest interest rate in Ghana,” Mr. Asafo-Adjei told the B&FT.
Renaissance Africa Group, a financial advisory services firm, has been charged to profile applicants for the loan and help them organise their documentation. Once the application reaches HFC, the loan should be processed in not more than four weeks, said Mr. Asafo-Adjei.
Other flexible terms of the loan, he said, include a 36-month or three-year period of tenor and the fact that need for collateral may not apply in some cases.
Managing Director of HFC Bank Asare Akuffo said the bank is happy to be the first financial institution in Ghana to provide such a “focussed facility” to the mining and oil and gas sectors.
“Apart from fulfilling our medium- to long-term strategic objectives in exploring opportunities in the mining and oil and gas sectors, it will also give a boost to Ghanaian companies in particular who have had difficulties in taking advantage of the opportunities in this lucrative sector,” he said.
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