The new national bank, the Development Bank Ghana (DBG), is to be operationalized in the third quarter of the year, thus between July and September 2021, suggesting that the government could not meet its End-July deadline for the commencement of the Wholesale National Bank as earlier announced.
“…With adequate capitalization, we are ready to operationalize Development Bank Ghana (DBG) in the third quarter of this year to help address critical financial constraints faced by our businesses. DBG will mobilize funds from both the domestic and international markets to support the private sector to invest in a medium to long term basis.
“DBG will thus unlock long term financing for actors in the manufacturing, agriculture, agro-processing, mortgage, and housing sub-sectors to propel economic growth, create jobs and improve domestic revenue mobilization”.
Ken Ofori-Atta
The Minister of Finance, Ken Ofori-Atta who revealed this to parliament during the presentation of the Mid-Year Budget Review noted that the government has made considerable progress towards its pledge to create a well-lubricated financial ecosystem to support the private sector in revitalizing and transforming the economy under the GHȻ100 billion Ghana CARES program. According to him, the government is paying special attention to anchor wealth-building for the youth, of which the DBG is expected to play a key role.
Target sectors of the DBG
It can be recalled that the government hinted of the establishment of a new development bank in the 2021 Budget Statement and Economic Policy presented on the floor of Parliament in March 2021. The Minister indicated that the Bank’s operations will focus on promoting private sector-led growth which is an essential element for Ghana’s economic development.
Even though the government indicated that preparations for the establishment of the DBG started in 2018, the bank is expected to play a key role in the country’s recovery process from the pandemic.
“The DBG will serve as a key instrument in our pursuit of economic transformation and job-creation, which are key elements of the Government’s overall National Strategy of Ghana Beyond Aid. It is worth noting that the advent of the COVID-19 pandemic has severely affected our economy, particularly the private sector, resulting in negative growth and job losses. In part, the DBG is being positioned as a post COVID-19 recovery institution endowed with adequate liquidity to provide long term capital to private operators within the economy”.
Ken Ofori-Atta
The Ghana Incentive-based and Risk Sharing Scheme for Agricultural Lending
Still touching on credit to critical sectors of the economy, the Minister noted that for almost two years now the Ghana Incentive-based and Risk Sharing Scheme for Agricultural Lending (GIRSAL), has been providing guarantees and technical assistance to banks to lower the risks that they perceive in lending to agriculture. This, according to the Mr. Ofori-Atta, is beginning to increase the volume and improve the terms of bank lending to agriculture and agribusiness.
To consolidate this progress, the Minister assured that under the Ghana CARES, Government will continue to support GIRSAL to strengthen its operations.
“We have also made available additional funding through GIRSAL to support the operationalization of the CARES COVID-19 Guarantee Scheme, which will allow Medium and Large-Scale Enterprises to access funding from financial institutions on improved terms to help them respond to the economic challenges of the pandemic and sustain employment for our people”.
Ken Ofori-Atta
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