The World Bank Board of Executive Directors on Thursday, October 29 approved US$250 million from the International Development Association (IDA) to support the establishment of the Development Bank of Ghana (DBG) also known as the National Development Bank.
The move is to help to increase access to long term finance and boost job creation for 10,000 enterprises in key sectors including agribusinesses, manufacturing and high-value services.
According to Pierre Laporte, World Bank Country Director for Ghana, Sierra Leone and Liberia, by offering long-term wholesale financing, credit guarantees, and other services, the Ghana Development Finance project will help increase overall lending to priority sectors and market segments.
“The project is aligned with government priorities outlined in the Coordinated Programme of Economic and Social Development Policies and is an integral part of the World Bank Group's efforts to promote sustainable growth in Ghana,” Pierre Laporte added.
In addition, the Development Bank of Ghana will finance multiple interventions to attract private sector financing for credit-constrained MSMEs and small companies based in Ghana.
“These interventions will include the establishment of a Partial Credit Guarantee facility and a digital financing platform to leverage private sector financing by making it more efficient and less risky for private financiers to lend to MSMEs,” said Carlos Vicente, World Bank Senior Financial Sector Economist.
Finance Minister Ken Ofori-Atta earlier this month noted that the National Development Bank is set to take off from January 2021. Government secures US$250m World Bank funds to start National Development Bank next year
The National Development Bank is expected to commence operations in 2020 to provide access to cheaper and long-term funding to some key companies operating in the agriculture and manufacturing sectors.
The Finance Minister delivering the 2020 budget statement to Parliament said the government is set to complete discussions with the World Bank and other development partners to capitalize the bank in 2020 for it to commerce operations.
“We have secured US$250 million from the World Bank as initial capitalization to kick-start the operations of the NDB and an interim board was set-up. In view of the high level of interest generated, other Donors such as DFID, KFW, AfDB are expected to provide additional capitalization for the Bank once it becomes operational in 2020.
The National Development Bank as envisioned 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 of the economy,” he added.
The Bank is expected to act as an independent institution with a strong corporate governance framework and would be globally rated to enable it to leverage foreign private capital for industrial and agriculture development in the country.
Mr. Ofori-Atta said the government will also provide periodic dedicated funds for intervention in key areas of the economy such as large scale agro-processing, housing, through various schemes and funds as needed for economic and social development and jobs