Minister for Finance, Ken Ofori-Atta, has said the newly launched Development Bank Ghana (DBG), on the back of its strong balance sheet, will raise its own capital on both the domestic and international debt markets.
Given the anticipation of the Bank to raise capital on both the domestic and international debt markets, the Finance Minister urged the Board and Management of DBG to work towards getting an international credit rating for the Bank within the shortest possible time.
“It is our firm expectation DBG will manage it affairs prudently, that soon it will be able to go to the market, both domestic and international, to raise its own funds on the basis of its balance sheet. This therefore requires the Board and Management to work hard toward getting an international rating for the Bank within the shortest possible time,” said Mr Ofori-Atta at the launch of the DBG on Tuesday, June 14, 2022.
According to the Finance Minister, total available resources for the Bank in both equity and debt is currently about $750m.
Equity commitment from the Government of Ghana is $250m out of which $200m has been paid, while the German Government through Kfw has given DBG a subordinated debt of 46.5m Euros and an additional 3m Euros grant for Technical Assistance.
The World Bank and EIB have given the Bank $225m and 170m Euros respectively. AfDB have also given the Government $40m grant which has been given to the Bank as equity.
Speaking further at the event, the Finance Minister noted the DBG has been created to provide access to long term finance at competitive interest rate for businesses particularly small and medium-sized enterprises (SMEs) in the country.
Currently, long term finance is not readily available for SMEs. Feasibility studies conducted for the set up of DBG shows that, only 11% of bank credit is more than 5 years. Also, less than 8% of credit goes to manufacturing, and less than 4% to agriculture, two of the sector critical to economic transformation.
The DBG, the Finance Minister further notes, is an institution created to reshape and strengthen the country’s financial architecture and make it more supportive of the private sector.
The DBG is expected to transform the economy by undertaking the following:
- The provision of long-term finance to economic units operating in the productive sectors of the economy at competitive interest rates.
- Provide funding facilities with tenures of up to 15 years.
- Lend funds to participating financial institutions for on-lending to SMEs.
- Operate a Partial Guarantee Window
- Operate a digital platform to facilitate factoring of invoices by SMEs.
Source: norvanreports