The establishment of the Development Bank Ghana (DBG) will ensure that Micro, Small and Medium-scale enterprises (MSMEs) will be able to access cheap but long-term loans with tenors of 5 years, 7 years, or even 15 years at competitively lower rates to finance their businesses.
This was disclosed by the Director of the Financial Sector Division at the Finance Ministry, Sampson Akligoh.
Mr Akligoh made the assertions during a virtual seminar held by the Rotary Club of Accra South themed, The Development Bank of Ghana (DBG); A Catalyst for Private Sector Growth, Facts and Figures.
Speaking at the virtual seminar, Mr Akligoh noted that the DBG will by itself not give out loans to the private sector, but will leverage on existing banks in the country to do so.
“The provision of wholesale loans to the private sector by the Development Bank Ghana will be made through existing commercial banks in the country,” he said.
According to him, commercial banks in Ghana will serve as the link between the DBG and the private sector in the provision of loans to businesses.
Speaking on the reasons for the establishment of the DBG, Mr Akligoh noted that one of the major reasons is to cause a paradigm shift in the public sector being the main provider of jobs to the private sector, which is the main provider of jobs for the country’s workforce.
“Most jobs provided in the country are from the public sector and its related institutions, but one of the major roles of DBG will be to cause that paradigm shift from the public sector being the biggest provider of jobs to the private sector. And this is going to be done by providing cheap, wholesale loans to the private sector to expand their businesses and employ more people,” he stated.
The DBG will be a wholesale development bank, established as a company, licensed by the Bank of Ghana under the new Development Finance Act under preparation, and will have sound corporate governance including an independent board and professional management, expected to operate without undue political interference from the government.
The bank will offer credit and below market average interest rates and credit guarantees.
It will mainly serve medium and small-sized enterprises, which find it difficult to secure credit at rates that allow for economically viable financing of their commercial activities.
When operational, the bank will refinance credit to industry and agriculture as a wholesale bank and also provide guarantee instruments to encourage universal banks to lend to these specific sectors in particular.