Mr Ken Ofori-Atta, the Minister of Finance, says the establishment of the Development Bank Ghana will address failures in the Ghanaian credit markets and increase the availability of medium and long term finance.
The bank will focus on agribusinesses with attention on off-farm value-chain activities, manufacturing, ICT, software and allied services, tourism, homeownership mortgage finance to enable Ghanaian businesses to facilitate economic transformation and job creation.
Mr Ofori-Atta said this in Accra at the Association of Ghana Industries (AGI) Corporate Forum, which brought together Chief Executive Officers of large corporations to discuss government’s vision with captains of industry.
The Minister said the bank, as a wholesale and non-deposit taking bank, required no branch network and a very small staff, stressing that the greenfield approach had the potential to attract more private entities, particularly foreign and institutional capital.
“We are aiming to establish the bank by the end of 2021 with an initial capitalization of around $ 250 million from the government ($200 million paid as at May 2021).
“World Bank plans support with $ 250 million, EIB plans euro 170 million, German Development Bank plans euro 46.5 million (tier 2 capital), and technical assistance of euro 3million, while French plans AFD initial support through partnership on guarantees”, he said.
He said despite the unsuccessful experience in Ghana and in many African countries, development banks were instrumental in driving economic transformation by providing investment finance to the Small and Medium Enterprises to encourage investment in new and promising, but risky economic activities.
The Minister mentioned Japan Development Bank, Korean Development Bank, Development of Singapore, and Development Bank of Brazil and Development Bank of German as examples of transformational development banks.
Mr Ofori-Atta said in learning from the best, the German government through its development bank, was investing in Ghana’s Development Bank and providing technical assistance for the set-up and initial running of the bank.
The ownership, governance and operational structures, the Minister said, have been carefully designed to ensure that the bank was able to manage professionally to successfully carry out its economic transformational mandate, while maintaining financially sustainable.
The robust design features of the bank will be reinforced by the new Development Finance Institutions Act 2020 (1032) to empower the Bank of Ghana to exercise a strong regulatory and supervisory body.
He said the cost of borrowing and interest issues would be addressed when all the requisite regulatory and administrative plans were put in place.
Dr Yaw Adu Gyamfi, the President of AGI, welcomed the government’s decision to establish the Development Bank Ghana and said AGI was waiting patiently for all the necessary arrangements for it to become operational.
“We will work to ensure the bank survives for businesses to thrive especially in the manufacturing and industry sector”, he said.
Dr Gyamfi said businesses were improving steadily but slows after the government recovery package and hopes to be better in the days ahead.
Some of the participants called for the establishment of the Industrial Manufacturing Competitiveness Council to encourage or sustain the manufacturing sector in the country and as well look into the 50 per cent benchmarking.