Development Bank Ghana: Government receives $40m grant from African Development Bank
A grant of $40 million to serve as additional capital for the operationalisation of the Development Bank Ghana, has been approved by the Board of Directors of the African Development Bank (AfDB).
The grant approved from the African Development Fund – Bank Group’s concessional funding arm – is to enhance the Development Bank Ghana’s mandate of providing finance to micro, small and medium sized enterprises as well as small corporates in agribusiness, manufacturing and information and communication technology (ICT).
According to the Bank, Ghana is pursuing an economic transformation agenda that requires the availability of affordable capital for medium and long-term investment by the private sector. However, there are constraints to private sector development, particularly for MSMEs, which account for the majority of businesses in the country, due to the lack of access to medium and long-term credit hence the addition of the $40 million to the already raised capital or seed fund of $500 million.
Commenting on the approval, African Development Bank Group’s Director General for West Africa, Marie-Laure Akin-Olugbade noted that, “The project to support the DBG is aligned with Ghana’s Beyond Aid Vision and supports the Government’s efforts to revitalize the economy post-COVID-19. The Ghana Beyond Aid Charter calls for the establishment of a new National Development Bank that is strong enough to mobilize domestic and foreign long-term private capital, in addition to Government’s contributions, toward agricultural and industrial transformation. This institution, which will operate as a wholesale bank, using a private sector model, will provide financial institutions with long-term financing to accelerate Ghana’s industrialization and agricultural modernization.”
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“The project will support Ghana’s COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) program that identifies the expansion of access to finance for Ghanaian businesses as one of the key measures for economic revitalization and transformation,” added Eyerusalem Fasika, the African Development Bank’s Country Manager for Ghana.
DBG is expected to yield significant economic benefits to the Ghanaian economy as it seeks to increase access to finance, which is consistently identified by businesses as the top impediment to growth.
Increased access to finance would particularly allow creditworthy businesses in the target sectors to invest, innovate and create high-quality jobs.
In the short term, there is strong potential for job creation in the agriculture and agribusiness sectors, which will be supported by manufacturing along the supply chain to generate high value economic activity and high-quality jobs in the long-term.
