The Development Bank Ghana (DBG) has given out loans of up to GHS300 million and provided technical assistance to over 1000 local businesses since the launch in June last year, the Deputy Chief Executive Officer of the Bank has disclosed.
Mr Michael Mensah Baah said the intervention was based on a wholesale banking model where funding was provided to eligible financial institutions to on-lend to Ghanaian businesses in targeted industrial sectors.
“We have identified agribusiness, manufacturing, ICT and high value services as the catalytic sectors of the economy to focus on.
“Our business model allows us to leverage on the networks and existing infrastructure of banks and financial institutions that partner with us to provide
business advisory services and training in addition to financing,” he explained during a roundtable on Development Finance at the University of Ghana Business School.
Mr Baah indicated that the Bank was looking to addressing the lack of long-term financing to drive the investments that would lead to sustainable growth, adding that, “data from the World Bank, showed 67 per cent of loans in Ghana’s banking sector are short-term in nature while just 33 per cent of loans typically had tenors over three years.”
Moreover, he said DBG had plans to introduce partial guarantee system to share risks of investments with banks in areas such as agribusiness and invest about GHS 500 million in commodities such as soya bean, maize, rice and poultry with the intention of enhancing food security.
Mr Daniel Addo, the Managing Director of the Consolidated Bank of Ghana (CBG), encouraged the DBG to stay focused on its mandate of providing long-term and concessional funding for social and economic sectors that were underserved by
commercial banks.
Though not required to be profit maximisers, he said the Development Bank must work to among other things, remain financially sustainable with less reliance on capital injection from the government and ensure funds advanced to the Participating Financial Institutions were repaid when due so DBG could recycle capital.
He said it was also necessary for CBG to carefully identify the sectors it could make maximum impact and focus its lending and advocacy appropriately.
“DBG must guard against the temptation to stretch itself thin otherwise its impact will not be felt,” he said.
