President Nana Addo Dankwa Akufo-Addo Tuesday formally unveiled the Development Bank Ghana (DBG) to meet the demand for credit for the growth of Small and Medium Enterprises (SMEs).
The DBG will concentrate on economic transformation, particularly industrialization and value-addition in agriculture, and act as an enabler for businesses and as a long-term capital provider in the market.
DBG will lend some $600 million to small companies in agribusinesses, manufacturing, and high-value services over the next one to two years, to contribute to the country’s economic growth.
At an inaugural ceremony in Accra, the President observed that there was very little long-term financing available at rates that will allow SMEs to grow.
He said the setting up of the DBG was the result of years of painstaking efforts undertaken by the government to strengthen the infrastructure and the transformation of the Ghanaian economy for private sector-led growth.
“It is one of many policy initiatives that my government has produced to help transform the Ghanaian economy. The overriding objective is to make long-term funding available to the private sector, and develop the ecosystem for market access, technology, and innovation,” he said.
The President stated that the DBG, over a period, would help transform the key sectors of the economy by supporting all institutions that are essential for SME transformation.
These sectors include manufacturing, agriculture (especially off-farm value chain activities), ICT and allied services, tourism, and the mortgage and housing market.
President Akufo-Addo explained that since Ghana attained independence, attempts by various administrations to improve access to finance and markets had not been able to provide systematic support for private sector growth.
“Undoubtedly, Development Bank Ghana should be the bedrock for our renewed commitment to private sector development. It is expected to work to transform our SMEs into well-functioning, formal and strong corporates with the potential to increase our GDP, employ more people, and enhance our tax efforts,” he said.
The Bank, the President said, must be partners with the private sector, and must work with them to provide access to long-term funds, access to markets both domestic and foreign, and skills developments.
“Development Bank Ghana will support all banks in the economy to have access to long-term funds, including the National Investment Bank, the Agricultural Development Bank, and the Ghana Exim Bank. It will also support private equity funds, and other capital market firms to have access to our bond market, and facilitate equity financing for SMEs,” he assured.
The President stated that the Bank will partner with research institutions to undertake sector research, and support innovation centers and business accelerators.
“It will ensure that the requisite capital is directed towards business ideas with the most potential for growth and job creation, under the financial services ecosystem.”
The government, the President said expects the DBG to use its strong financial position to support the growth of private sector companies to help create high-quality jobs and enable Ghana’s private sector to compete more favourably within the African Continental Free Trade Area framework.
He was optimistic that the bank “will help spur the vision of moving Ghana a situation beyond aid,” and gave the assurance that the government would not get involved in the operations of the institution.
The government is putting $250 million equity in the DBG. The African Development Bank is granting $40 million.
The World Bank, the European Investment Bank and KfW Development Bank – among other international development institutions have also supported the DBG
The World Bank is lending $200 million and the EIB and KfW 170 million euros ($177.7 million) and 46.5 million euros, respectively.