The export credit agencies (ECA) of the US and Ghana have signed a US$300mn agreement to support the procurement of US goods and services by Ghanaian SMEs.

The agreement sees the Export-Import Bank of the United States (US Exim) and Ghana Export-Import Bank (Gexim) utilise US Exim’s medium-term loan guarantees to support financing by Gexim for on-lending to qualified Ghanaian SMEs for their purchase of US goods and services.

Under the agreement, the two ECAs will create an on-lending structure that allows Gexim to serve as the borrower and the primary source of repayment for US Exim.

The West African ECA will on-lend in transactions of up to US$10mn to Ghanaian businesses for the purchase of US exports.

Due to US Exim’s lack of voting quorum, individual loan guarantees must be capped at US$10mn as this is its limit for authorising transactions in its current hamstrung state.

According to US Exim, the framework represents an opportunity to support Ghana’s ambition for industrial development through the establishment of small-scale industries in each of the country’s administrative districts. The agreement aims to improve financing opportunities for SMEs in Ghana “that are participating in Ghana’s transition from a commodities-based economy to an economy with value-added industries”, it says.

US Exim tells GTR that several US sectors will also benefit from the agreement, including agricultural equipment and other agriculture-related goods, industrial machinery and equipment, and technologies related to manufacturing.

Gexim CEO Lawrence Agyinsam says: “As the lead financing institution mandated to support the government’s ‘one district, one factory’ programme, Gexim will be better positioned to empower and equip private sector operators situated in each district to add value to their raw materials through processing and final export.”

Jeffrey Gerrish, US Exim chairman and acting president, says that the framework agreement “confirms US Exim’s commitment to President Donald Trump’s ‘Prosper Africa’ initiative and demonstrates our sincere interest in partnering with Gexim to create economic opportunities and jobs in both Ghana and the US”.

The Prosper Africa initiative was launched in 2018 to advance American and African prosperity. US Exim says the initiative is intended to open markets for American businesses, grow Africa’s middle class, promote youth employment opportunities and improve the business climate.

For the US, the co-operative framework agreement with Ghana is the first of its kind in Africa: the US has traditionally preferred to sign memoranda of understanding with lending institutions as part of its overall outreach strategy in Sub-Saharan Africa.

The agreement with Ghana is US Exim’s second in a month with an African trading partner as part of Prosper Africa, having also signed a similar deal with Angola.

In 2018, US exports to Ghana were valued at US$886mn, the third-largest Sub-Saharan market for the US, behind South Africa and Nigeria, according to the office of the United States trade representative.