Announcement of IDA Provides Nineteen Million Dollars to Ghana for Second Investment Bank Project on May 10, 1979

,.. • . • w~ _ FOR IMMEDIATE REtEASE \ .World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 79/67 May 10, 1979 IDA PROVIDES $19 MILLION TO GHANA FOR SECOND INVESTMENT BANK PROJECT The International Development Association (IDA), the soft-loan affiliate of the World Bank, today announced its approval of a $19 million credit to the Republic of Ghana for a second project to assist the National Investment Bank (NIB). This amount, supplemented by a $6 million credit from the EEC Special Action Account and fully administered by the Association, brings the line of cred~ to $25 million. I The project is aimed at expanding and rehabilitating Ghana's manufacturing and agro-industrial capacity, with special emphasis on increasing foreign exchange earnings and savings and improving domestic linkages with agriculture and other sectors. The IDA credit will provide foreign exchange to make term loans, totaling $12.2 million, for capital investments to expand and rehabilitate industrial capa- city. Another $6 million will be used for working capital loans to NIB's clients for the purchase of spare parts and raw material imports, required to improve • utilization of existing industrial capacity. The EEC Special Action Account credit of $6 million will bring the foreign exchange provision of this component to $12 million. About $0.8 million will be devoted to technical assistance to strengthen Ghana's export program and NIB's promotional and project appraisal activities. The first project, assisted by the WorlQ Bank, with a $10 million loan in 1975, provided foreign exchange financing for industrial, agro-industrial, and tourism projects and assisted in NIB's institutional growth. The IDA/EEC credits will be onlent to NIB, except for $0.5 million to be retained by the government for technical assistance. NIB is a publicly owned devel- opment finance company, created in 1963, to promote and finance mainly private but also public enterprises in all productive sectors. It is the main Ghanian institu- tion providing medium-and long-term financing to the manufacturing sector. NIB has a sizeable pipeline of investment projects at various stages of preparation, which as of September 1978, included 25 manufacturing, agro-industrial, and related service projects requiring term-financing. Of these, 21 projects are in the private sector, and the remaining four are publicly owned enterprises. NIB expects to approve about $16 million in foreign exchange term-financing in 1979 and 1980, and will require another $20 million in foreign exchange to finance the working capital program. The IDA credit of $19 million to Ghana is for 50 years, including 10 years of grace. It is interest free, except for a service charge of 3/4 of 1% to cover IDA's administrative expenses. The EEC credit is being provided on the same terms and conditions. • NOTE: Money figures are expressed in U.S. dollar equivalents . FORM NO. 1121 (5-76) T E C HN I CA L DA TA PROJECT: COUNTRY: TOTAL COST: Second National Investment Bank Republic of Ghana $25 mi 11 ion (in foreign exchange} • IDA FINANCING: $19 mi 11 ion, IDA standard terms OTHER FINANCING: European Economic Community (EEC) Special Action Account credit, $6 million, fully administered by IDA and re-lent for foreign exchange working capital. lMPLEMENTING ORGANIZATIONS: National Investment Bank (NIB) P.O. Box 3726 Accra, Ghana TELEX: 2161 INVESTOR, Accra CABLE: INVESTBANK, Accra Ministry of Economic Planning (for technical assistance) P. 0. Box M76 Accra, Ghana PROJECT DESCRIPTION: The project will provide foreign exchange to finance: (a) term loans ($12.2 million) for expansion and reha- bilitation of productive capacity of high-priority manufacturing, agro-industrial, and related service enterprises;{b) part of a two-year working capital proqram ($12 mil- lion) for spare parts and raw materials imports to assist high-priority projects whose. operations have been adversely affected by· foreign exchange ihoitages; and Cc) tech- nical assistance to the government ($0.5 million) to prepare and implement an export and marketing program and to NIB ($0.3 million) for project identification, appraisal, and supervision activities. PROCUREMENT: Procurement will be handled through normal commercial channels. Disbursements will be 100% of the foreign currency costs of imported goods, 80% of the invoiced price of imported goods purchased locally, 70% of invoiced price of goods produced in Ghana with substantial import content, and 50% of the costs of civil works. CONSULTANTS: NIB will need about 3-1/2 man-years of expert and con- sultant services, including an industrial economist and short-term consultants in selected subsectors. Another 6 man-years of technical assistance wiil be needed to assist the government in formulating and implementing an export promotion program with emphasis on non-traditional exports. The 'main focus will need to ~e placed on ;nstitutional and procedural improvements as well as the estahlis~M~nt of an actual export program and ~echanism, including exploration of long-term contractual agreements with overseas buyers. Existing export policies and programs will also need to be reviewed. Technical assistance personnel financed under the project will be employed with qualifications and on terms and conditions satis- factory to IDA. ESTIMATED COMPLETION DATE: 1983 - 0 - •