Consolidated Bank pledges long-term credit to businesses
The Managing Director of Consolidated Bank Ghana Ltd. (CBG), Daniel Wilson Addo, has pledged the commitment of the bank to provide long-term credit to support the growth of businesses.
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That, he said, would be done through the bank’s deepened collaborations with the Development Bank Ghana (DBG) as part of measures to drive economic growth among Ghanaian businesses.
Consequently, he said the bank looked forward to work with DBG to on-lend to Ghanaian businesses in targeted industries such as agribusiness, manufacturing, ICT, and high-value services as the catalytic sectors of the economy identified by DBG.
Speaking at a round table meeting at the University of Ghana Business School (UGBS), he said "DBG has a big audacious goal to address very key challenges within the business community.
We all know the importance of small and medium size enterprises (SMEs) support to Ghana's economy, and CBG is delighted to be associated with DBG because of our commitment to see that sector thrive."
He said the bank had partnered DBG to train 160 SMEs on the foundational financial literacy course as part of an SME financial empowerment programme.
Focus
Mr Addo encouraged DBG to remain focused as an enabler for businesses in Ghana and as a long-term capital provider in the market.
According to him, although DBG is not required to maximise profit, the bank needed to work to remain financially sustainable with less reliance on capital injection from the government.
It is also to ensure that funds advanced to the participating financial institutions are repaid when due in order to help DBG recycle capital.
“By the very nature of national development banks (NDBs), they are not required to be profit maximisers.
However, to effectively discharge their mandates and limit the recourse to scarce public funds, they must be financially sustainable.
In a 2021 research report, Fitch estimated that one-third of 84 African NDBs posted losses in 2019 and the trend continues,” Mr Addo said.
While NDBs are not profit-driven, consistently posting losses raises the need for continuous capital injection from a government that already has very little fiscal space to operate.
According to him, when such happens, it then opens the institution up to government interference.
To counteract this, DBG will have to manage its funding costs, operate at high levels of efficiency, and as much as possible employ funding structures that minimise credit losses,” he advised.
He added that it was also necessary for CBG to carefully identify the sectors where it could make the most impact and focus its lending and advocacy efforts appropriately.