Ghana: Work to raise funds in the international capital market…Finance Minister urges Dbg

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Finance Minister Ken Ofori-Atta said Development Bank Ghana (DBG) must manage its affairs carefully and raise its own funds based on its track record in the international capital market.

“So this compels the board and management to work hard to get an international rating for the bank as soon as possible,” he said last week at the DBG launch in Accra.

DBG is a development finance institution and wholesale bank whose mandate is to provide long-term loans to commercial banks for on-lending to small and medium enterprises.

With a capital of nearly 800 million dollars, the shareholders of DGB are the government of Ghana, which provides 250 million dollars; KFW, for €48.5 million; the World Bank, proving $225 million; the European Investment Bank, up to 170 million euros and the ADB, up to 40 million dollars.

Mr. Ofori-Atta said that development banks had been powerful instruments of economic transformation and growth in several countries.

“There are many countries where development banks have failed to live up to expectations. Therefore, when establishing DBG, we looked at all of these experiences, including our experiences in Ghana, and it is clear to us that the big differentiator for success is the governance of the institution and the professionalism with which they are run,” he said.

The Minister of Finance said that DBG was designed to be financially sustainable and would focus primarily on economic transformation, especially industrialization and value addition in agriculture.

“It will also support businesses in the areas of technology, tourism and high value-added services. The objective will be to focus on SMEs and relatively large Ghanaian companies in these sectors to help transform the economy and create jobs,” he said.

He said the President’s vision for Ghana’s economic transformation required long-term investments led by the private sector, hence the need to provide the private sector with access to competitive long-term financial rates.

“Currently in our country this is not readily available especially for Ghanaian SMEs. For example, evidence from the feasibility study conducted for the establishment of DBG showed that only 11% of bank credit is higher to 5 years. In addition, less than 8% of credit goes to manufacturing and less than 4% to agriculture, two of the sectors critical to economic transformation. It is this gap that DBG has created,” he explained.

Ofori-Atta hinted that the DBG will transform the economy by “providing long-term financing to economic units operating in the productive sectors of the economy at competitive interest rates, by providing financing facilities of a term of up to 15 years, lending funds to participating financial institutions for on-lending to SMEs, operating a partial guarantee window, operating a digital platform to facilitate invoice factoring by SMEs.”

The Minister of Finance revealed that to ensure the growth and success of the DBG, the government and the BoG have established a task force comprised of senior experts from the public and private sectors to provide advice on the establishment of the bank, in particular by supervising the feasibility study carried out. by PwC, which was selected through an international competition.

The guidelines, he said, were that “DBG must be a wholesale non-deposit bank, it must not provide loans to individuals or direct businesses, it must provide funds to existing commercial banks and other institutions eligible financial institutions in the capital market to provide long-term loans and other innovative products that are currently lacking in the system.”

“The DBG should complement and strengthen the operations of existing financial institutions by making available adequate long-term funding, this should be regulated,” he added.

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