Partners commit US$500m to Dev't Bank
Mr Ken Ofori-Atta

Partners commit US$500m to Dev't Bank

The Development Bank of Ghana (DBG) which was recently registered has already received commitments of over US$500 million from investors and development partners, Minister of Finance, Mr Ken Ofori Atta has disclosed.

The partners include KFW Development Bank, the World Bank, the African Development Bank, and the European Investment Bank.

He said the bank which would soon be operational would become a wholesale bank which would support capitalisation of other financial institutions.

Speaking at the launch of the Ghana Stock Exchange’s 30th anniversary, he said the reforms in the financial sector had created an expanded echo system and created a sense that the country was now ready to fund its transformation agenda.

Development Bank of Ghana

The Development Bank of Ghana is expected to focus on transforming the industry, agriculture, agro-processing, and housing and mortgage sub-sectors of the economy over the medium-term.

It will serve as a promotional bank for the country, with a focus on mobilising medium to long-term funds and channel them into the economy through the financial system as a wholesale bank.

It is expected to deploy products and instruments such as credit guarantee funds, refinancing of Participating Financial Institutions (PFIs) loans, term loans, business development services, and factoring, among others.

The Minister in his 2020 mid-year budget indicated that the proposed Development Bank had generated keen interest from major international financial institutions willing to provide funding for its establishment.

Domestic market

The bank is also expected to source funds from the domestic, regional, and international capital markets through periodic issuance of bonds, diaspora instruments, and direct borrowing.

The minister noted that the Development Bank Ghana was being positioned as a post COVID- 19 recovery institution, learning from the experience of KfW and Development Bank of Singapore, among others, which were critical institutions for the transformation of their respective countries.

DBG will be regulated by Bank of Ghana, with a competitively selected independent Board and Management.

World Bank Approves US$250 million

The World Bank in October this year noted that its Board of Executive Directors have approved US$250 million from the International Development Association (IDA) to support the establishment of the Development Bank of Ghana (DBG), which would increase access to long term finance and boost job creation for 10,000 enterprises in key sectors.

The World Bank Country Director for Ghana, Sierra Leone and Liberia, Pierre Laporte, said by offering long-term wholesale financing, credit guarantees, and other services, the Ghana Development Finance project would help increase overall lending to priority sectors and market segments.

“The project is aligned with government priorities outlined in the Coordinated Programme of Economic and Social Development Policies and is an integral part of the World Bank Group’s efforts to promote sustainable growth in Ghana,” he stated.

World Bank Senior Financial Sector Economist, Carlos Vicente, in a release announcing the US$250million support, said the DBG would finance multiple interventions to attract private sector financing for credit constrained MSMEs and small companies based in Ghana.

“These interventions will include the establishment of a Partial Credit Guarantee facility and a digital financing platform to leverage private sector financing by making it more efficient and less risky for private financiers to lend to MSMEs,” he said.

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