Ghana’s Development Bank ignites hope
The recently launched Development Bank Ghana (DBG) aims to catalyze growth by lending over $600 million to small businesses over the next one to two years.
The government owned DBG has an initial $700 million to loan to private financial institutions – including CalBank, CBG, GCB and Fidelity Bank – who in turn will on-lend to SMEs.
The bank is financed through a consortium of loans from international lenders including the World Bank ($250m), the European Investment Bank ($170m), the German state-owned development bank KfW ($46.5m), the African Development Bank ($40m) and the government of Ghana ($253m). Speaking during the launch, chief executive Kwamina Duker, a former managing director of Fidelity Bank Asia said “Today’s launch marks an important milestone in our journey and is the result of many months and years of hard work from the DBG taskforce and working group, our staff, and our partners. However, tomorrow is no time to be complacent. We have an enormous task ahead of us…DBG recognises the crucial role of SMEs in our country’s economy and has made it its mission to catalyse their growth. We cannot do this without operating as a united front alongside our partners.”
Ghana wants the new bank to ease the access to credit and finance for its SMEs, which comprise about 80% of businesses in Ghana, by providing loans with tenors greater than three years. An estimated one to two million SMEs in Ghana are estimated to generate some 70% of GDP.
DBG's aim, which currently has 40 staff, is to raise the proportion of loans given to small businesses in Ghana from around 9% to 15% in two years, Duker said. Duker declined to share details of interest rates, but said they would be lower than those currently available commercially. Inflation in Ghana rose to a new 18-year high of 27.6% in May and interest rates were hiked 200 basis points to 19% the same month, to try to stem the rise in prices. "Is this a difficult time? Absolutely," Duker said. "Is this a time when a development bank is needed more than ever? Absolutely."