The Minister for Finance, Ken Ofori-Atta, says the government is working to make a new development bank operational by September this year.
Presenting the Mid-year Budget Review in Parliament on Thursday (23 July), Ofori-Atta said the government is working with KfW, World Bank, African Development Bank (AfDB) and the European Investment Bank (EIB) to establish the Development Bank Ghana (DBG) by September.
“The bank will focus on transforming the industry, agriculture, agro-processing, and housing and mortgage sub-sectors of the economy over the medium term,” Ofori-Atta said. “It will serve as a promotional bank for the country, with a focus on mobilising medium-to-long-term funds and channel them into the economy through the financial system as a wholesale bank.
“It will deploy products and instruments such as credit guarantee funds, refinancing of participating financial institutions’ (PFIs’) loans, term loans, business development services and factoring,” he said.
The Finance Minister told the House: “Mr Speaker, the proposed Development Bank has generated keen interest from major international financial institutions willing to provide funding for its establishment. It is expected that the combined resources from these international institutions will amount to about US$500 million by December 2021.”
The bank is also expected to source funds on the domestic, regional and international capital markets by issuing bonds, diaspora instruments and direct borrowing periodically.
The DBG is being positioned as a post-COVID-19 recovery institution, learning from the experience of institutions such as KfW and the Development Bank of Singapore, which played a critical role in the transformation of their respective countries.
Development Finance Institutions Bill
“DBG will be regulated by Bank of Ghana, with a competitively selected independent board and management,” the Finance Minister told Parliament.
“The government completed a draft Development Finance Institutions Bill 2020, which received executive approval and is a key regulatory pillar for the promotion of the development finance ecosystem.
“This bill will be laid in this august House for consideration and passage,” the minister said.