Development Bank Ghana (DBG) has established an Environmental and Social Management System (ESMS) to identify, manage and monitor Environmental and Social (E&S) risks that will arise from its activities and those of its Participating Financial Institutions (PFIs) as well as their beneficiary end-borrowers.
According to the ESMS, DBG anticipates that in the delivery of its lending and investment, it may be exposed through the PFIs to the environmental and social risks associated with the business activities of the sub-borrowers and sub-projects they finance. It is anticipated that potential E&S risks associated with some of DBG’s activities will be substantial (E&S risk category B+ or FI/B+).
DBG’s ESMS is a framework that integrates environmental and social risk management into the Bank’s wholesale financing decision-making processes. The ESMS includes sound objectives, well-defined procedures and responsibilities that will ensure that the Bank avoids and manages loan facilities that have potential environmental and social risks.
Development Bank Ghana assured in its ESMS that it will ensure that it finances only loans that will not harm the environment.
“DBG is committed to financing environmentally and socially sustainable projects that do not adversely impact the environment and the communities in which they are executed. The ESMS has been put in place to ensure that E&S Risks are identified, analyzed and mitigated during the Bank’s business activities and those of its PFI clients”.DBG’s ESMS
DBG to undertake regular sensitization of staff and its PFIs
Also, DBG underscored that it will ensure that all its staff and its PFIs are regularly sensitized on the E&S risk management procedures and ensure that projects undertaken by end-borrowers undergo proper procedures in E&S due diligence so that the Bank can make informed decisions on a borrower, to avoid and mitigate any E&S risk associated with its loan facilities and other products/services.
The system involves categorizing risk, screening, conducting environmental and social due diligence prior to loan agreements and disbursements; provides adequate monitoring of PFIs during the term of the loan agreement. DBG pledges to ensure that adequate financial and human resources, as well as technical assistance activities needed to effectively implement the ESMS, are made available within the institution.
In a statement, the Ministry of Finance disclosed that the Board of Directors of DBG approved the Environmental and Social Management Policy and associated Procedures on December 1, 2021. According to the Finance Ministry, this Policy will enable DBG to align itself to best international practice and local legislation governing environmental and social issues and forms the basis of DBG’s Environmental and Social Management System (ESMS).
Development Bank Ghana
Development Bank Ghana (DBG) aspires to be Ghana’s primary development finance institution, promoting growth and sustainability in the financial sector.
The core mandate of DBG is to alleviate financing constraints faced by micro, small and medium enterprises (MSMEs) and small corporates in agribusiness, manufacturing and high-value services through the provision of wholesale financing and partial credit guarantees to eligible financial intermediaries (to be known as Participating Financial Institutions – PFIs) for on-lending to an underserved MSME sector in Ghana.
DBG will provide long-term financing to those sectors that would be of significance for Ghana’s economic transformation and job creation. DBG is focusing its mandate on providing funding for SMEs and Local corporates in the Manufacturing, agribusiness and ICT sectors of the Ghanaian economy.
DBG will provide long-term funds to eligible banks and specialized deposit-taking institutions (PFIs) for on-lending to the end borrowers in key economic sectors mentioned above.
Under the financing arrangement, DBG will be a wholesale lender to these PFIs to provide medium to long term loans, with tenures greater than 3 years to be on-lend to targeted Ghanaian Businesses, including refinancing facility of long-term loans. The DBG will also offer lines of credit and credit guarantees to the PFIs, as well as other financial and non-financial services.