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World Bank approves funding to establish Development Bank of Ghana

BY: Kweku Zurek
Mr Ken Ofori-Atta, Minister of Finance
Mr Ken Ofori-Atta, Minister of Finance

The World Bank Board of Executive Directors has approved a US$250 million funding package for a new development bank in Ghana, as part of the Ghana Development Finance Project, aimed at increasing access to long-term finance in the country.

A press release by the World Bank said once established, the Development Bank of Ghana (DBG) is expected to boost job creation for 10,000 enterprises in key sectors including agribusinesses, manufacturing and high-value services.

The International Development Association (IDA), a member of the World Bank Group, which offers grants and low-interest loans to developing nations, will provide the credit for the Ghanaian government to help launch the project.

The World Bank’s country director for Ghana, Mr Pierre Laporte, said the DBG will offer support through long-term wholesale financing, credit guarantees and other services.

“By offering long-term wholesale financing, credit guarantees, and other services, the Ghana Development Finance project will help increase overall lending to priority sectors and market segments,” said Mr Laporte.

“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."

The World Bank said the Ghana Development Finance Project is expected to increase the number of viable Micro, Small, Medium and Enterprises (MSMEs) with access to long-term financing in the country.

It will also provide financial services to some 10,000 businesses, including 2,000 women-led MSMEs, while strengthening the oversight of development finance institutions and the adoption of environmental and social standards by financial institutions.

In addition, DBG will 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,” said Carlos Vicente, the World Bank Senior Financial Sector Economist.

Promotional bank

The decision to establish the DBG was first mentioned by the Minister of Finance, Mr Ken Ofori-Atta during the presentation of the mid-year review of the 2020 Budget and Economic Statement to Parliament in Accra on July 23, 2020. He observed that the DBG was to serve as a promotional bank for the country when established.

He said it would focus on mobilising medium to long-term funds and channelling them into the economy through the financial system as a wholesale bank.

"Mr Speaker, the government is working with KfW, World Bank, AFD and European Investment Bank (EIB) to operationalise the Development Bank Ghana (DBG) by September 2020.

"The bank will 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 channelling them into the economy through the financial system as a wholesale bank," he said.