The Development Bank of Ghana (DBG) will neither give retail nor direct business loans, “like the former Bank for Housing and Construction, National Investment Bank, 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.
Mr Ken Ofori-Atta, Minister of Finance, speaking at a press conference on the establishment of the DBG, said the bank would, therefore, complement and strengthen the operations of existing financial institutions.
“It is important to state that since independence, this is the first time we are establishing a bank of this nature. It is a model along the lines of the German Development Bank – KfW, which played a pivotal role in the post-World War II reconstruction and transformation of the German economy,” he said.
He said through DBG, Government would be able to further strengthen its support to the private sector to spearhead economic growth and transformation.
Mr Ofori-Atta said the DBG was an instrument to ensure long term finance to the private sector on a sustainable basis.
“Government, therefore, expects DBG to be a financially sustainable institution that is able to raise long term funds from the domestic and international capital markets and from international financial institutions, based on its own balance sheet,” the Minister added.
He said the bank intended to be a model institution that supported the financial system to play its role in supporting the private sector to expand and create jobs and help address the lack of long-term funding and the lack of adequate funding to the productive sectors of the economy.
Currently, less than 15 per cent of loans given out by banks were for five years or longer, making investment in long gestation project very difficult for the private sector.
Agriculture and manufacturing sector receive around 4 per cent and 8 per cent respectively of banks loans compared to their shares in GDP and employment and potential for driving economic transformation.
He said the primary focus areas of DBG would be: Agribusiness, with a focus on off-farm value-chain activities, manufacturing, ICT, software, and allied services, including business-process outsourcing, and tourism boosting home ownership 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,” he said.
He said the bank was a key pillar in the country’s efforts to quickly recover from the effects of the COVID-19 pandemic and quickly resume the economic transformation path as articulated in the Ghana CARES/Obantanpa Programme.
Mr Ofori-Atta said Government had taken the pains to ensure that DBG had a strong governance structure with professional and independent Board and Management.
A process to select the Board and Management on a competitive basis is currently underway.
It is expected to be launched in July 2021.