President Nana Addo Dankwa Akufo-Addo formally launched the Development Bank of Ghana (DBG) on Tuesday to address the need for financing to help small and medium businesses thrive (SMEs).
The DBG will focus on economic transformation, notably industrialization and agricultural value addition, and will serve as a market facilitator and long-term capital source.
Over the next one to two years, the DBG will lend $600 million to small firms in agribusiness, manufacturing, and high-value services, with the goal of contributing to the country's economic growth.
The President noted during an inauguration event in Accra that there was very little long-term finance available at rates that would allow SMEs to flourish.
He explained that the DBG was established as a consequence of the government's years of arduous work to improve infrastructure and modernize the Ghanaian economy for private sector-led growth.
"It is one of several policy measures developed by my government to assist in the transformation of Ghana's economy. "The overarching goal is to provide long-term investment to the private sector while also developing the ecosystem for market access, technology, and innovation," he explained.
The DBG, according to the President, will assist alter important sectors of the economy over time by supporting all institutions necessary for SME reform.
Manufacturing, agriculture (particularly off-farm value chain activities), ICT and allied services, tourism, and the mortgage and housing market are among these industries.
President Akufo-Addo highlighted that initiatives by previous administrations to enhance access to financing and markets have failed to offer consistent support for private sector growth since Ghana's independence.
"Without a doubt, the Development Bank of Ghana should serve as the cornerstone of our reinvigorated commitment to private sector development." It is anticipated to work to turn our SMEs into well-functioning, formal, and robust corporations with the ability to boost GDP, expand employment, and improve tax collection," he added.
The Bank, according to the President, must engage with the private sector to give access to long-term funding, access to local and international markets, and talent development.
"The Development Bank of Ghana will assist all banks in the economy, including the National Investment Bank, the Agricultural Development Bank, and the Ghana Exim Bank, in gaining access to long-term funding." It would also ease access to our bond market for private equity funds and other capital market enterprises, as well as equity financing for SMEs," he promised.
The Bank will collaborate with academic institutes to conduct sector research and will assist innovation centers and business accelerators, according to the President.
"Under the financial services ecosystem, it will guarantee that the necessary funding is channeled towards company concepts with the greatest potential for development and employment creation."
The government wants the DBG to use its strong financial position to encourage the expansion of private sector enterprises, allowing Ghana's private sector to compete more favorably within the African Continental Free Trade Area framework, according to the President.
He expressed confidence that the bank "would assist propel the ambition of putting Ghana beyond aid," and promised that the government would not interfere with the bank's functioning.
The government will provide $250 million to the DBG. The African Development Bank will provide $40 million to the project. The DBG has also received assistance from the World Bank, the European Investment Bank, and the KfW Development Bank, among other international development agencies.
The World Bank will provide $200 million, while the European Investment Bank and the Kreditanstalt für Wiederaufbau (KfW) will lend 170 million euros ($177.7 million) and 46.5 million euros, respectively.
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