President Nana Addo Dankwa Akufo-Addo on Tuesday inaugurated the Development Bank Ghana (DBG) in Accra to provide long-term finance and boost job creation for over 10,000 enterprises.
The DBG seeks to provide $600 million to small businesses in the agriculture value chain, manufacturing and high-value services.
Speaking at the launch, President Akufo-Addo said there was very little long-term financing available at rates that would allow Small and Medium enterprises SMEs to grow.
He said DBG would provide access to medium-and long-term finance for enterprises particularly SMEs to improve competitiveness, support job creation and fiscal revenues, and alleviate the impact of COVID-19 on businesses.
President Akufo-Addo assured that the government would not interfere in the operations of the bank.
President Akufo-Addo said as one of the many policies initiated by the government to transform the economy, DBG's overriding objective is to make long-term funding available to the private sector and develop the ecosystem for access to markets technology and innovation.
That, the President stressed, would help position the private sector and take the lead in the country's socio-economic transformation.
Ghana's economy remains predominantly public sector dominated and informal. About 80 per cent of registered businesses which are small to medium scale enterprises and owned by Ghanaians continue to struggle to access long-term capital and markets.
The DBG's focus, according to the President, is to help transform these sectors of the economy--manufacturing, agriculture, especially off-farm value chain activities, ICT and light services, tourism, mortgage and housing markets, over a while.
Apart from the framework agreement with KFW to establish a development finance institution, the government agreed to work with other multilateral institutions to diversify the bank's shareholder structure.
That resulted in Ghana's government $250 million equity, an African Development Bank (AfDB) grant of $40 million, the World Bank, $250 million and the European Investment Bank and Germany's development agency KfW 170 million euros ($177.7 million) and 46.5 million euros, respectively.
He thanked the European Bank, the World Bank and the African Development Bank (AfDB) for their belief and commitment to the establishment of the DBG.
The Minister of Finance, Ken Ofori-Atta, said the launch of DBG was critical in the government's efforts to reshape and strengthen the financial architecture and expand the economy and make it more supportive of the private sector.
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The Minister said President Akufo-Addo's vision for the financial sector requires long-term investment, a stable macroeconomic environment and a business-friendly market climate led by the private sector.
For that to happen, Mr Ofori-Atta said the private sector needed access to long-term financing at competitive rates which currently was not readily available in the country.
On his part, the Managing Director of DBG, Kwamina Duker, said the bank would lend between $5 million and $30 million to commercial banks.
Those banks would then make three to 15-year loans of $25,000 to $3 million to small companies.
DBG aims to raise the proportion of loans given to small businesses in Ghana from around 9% to 15% in two years.
Representatives of the World Bank, EIB and KFW gave their solidarity messages to support the establishment of DBG.
