Finance Minister Ken Ofori-Atta
Finance Minister Ken Ofori-Atta yesterday revealed that the Development Bank Ghana (DBG) would in the next five years inject $1billion dollars into the economy
Addressing a press conference, he said this is part of the government’s efforts to revitalize the economy and set it back in motion under the ‘GhanaCare Obaatanpa’ programme.
According to Mr Ofori-Atta, DBG will help address two important constraints in the country’s financial system. These are the lack of long-term funding and the lack of adequate funding to the productive sectors of the economy.
He said through DBG, investment will be made in agribusiness, with a focus on off-farm value-chain activities, manufacturing, ICT, software, and allied services, including business-process outsourcing, tourism and boosting homeownership through affordable and longer tenure mortgage finance.
“DBG is not similar to the existing commercial banks that we have in the country. It is a non-deposit taking wholesale bank. DBG will neither give retail nor direct business loans, like the former Bank for Housing and Construction, NIB, ADB, and the like.
“It will rather provide funds to the existing commercial banks and other qualifying financial institutions to provide long-term lending and other innovative products that are presently lacking in the system. The bank will therefore complement and strengthen the operations of existing financial institutions,” he added.
Rationale
He explained why the government considers DBG as the best approach to moving the country from the COVID induced setback, saying “the creation of a modern and dynamic development bank is critical to the country’s economic rebound.”
According to the Finance Minister, this approach has the potential to attract more private and international institutional capital, as observed by the €170 million facility by the European Investment Bank (EIB).
He noted that the new bank starts from a clean slate, with no legacy financial, governance and other issues, saying this is an advantage policy banks like the Agric Development Bank (ADB) and National Development Bank (NIB) do not have.
The Minister disclosed that the new bank would be launched in July, this year, with an initial government of Ghana equity contribution of $250 million, adding that US$200 million of the amount had already been paid by government and institutional investors.
He said government aims to increase DBG’s lending capacity by raising additional funds from domestic and international private and institutional investors in order to build the needed foundation for the bank to shore up the Ghanaian economy.
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