With a little over a month for the National Development Bank of Ghana to commence operations, the outgoing Acting Country Manager of the African Development Bank, Sebastian Okeke, says his outfit is taking every step necessary to get more international financial institutions to support the funding of the bank.
To support the establishment of the bank, the World Bank’s Board of Executive Directors on October 29, 2020, approved US$250 million from the International Development Association (IDA).
According to the Finance Minister, apart from the World Bank, the proposed Development Bank has generated keen interest from major international financial institutions like the Department for International Development (DFID), KFW, and AfDB, who are willing to provide funding for its establishment.
Speaking to Citi Business News on efforts to finance the Development bank, the outgoing AfDB Acting Country Manager, Sebastian Okeke said apart from getting other entities to support the new bank, the AFDB itself is considering making equity or debt investments in the new bank.
“KFW for example is bringing a lot of money to support the establishment of the Development Bank of Ghana. For us at AfDB, we are the partner of choice for the Government of Ghana, so we have to do everything we can to help Ghana by bringing onboard many development partners to support in the establishment of the entity. We on our part are working on supporting either through equity or through debt.”
The establishment of a Development Bank of Ghana sometimes referred to as the National Development Bank has been consistently mentioned in the national budget since 2018.
Per the Finance Minister’s recent pronouncements, the National Development Bank is set to take off from January 2021.
According to Ken Ofori-Atta, as envisioned, 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 and more of the economy.
Parliament approves financing agreement
Parliament has approved the financing agreement between the Government of Ghana and the International Development Association (IDA) of the World Bank for an amount of $250 million for the establishment of a National Development Bank.
The World Bank Board of Executive Directors had earlier on October 29, 2020, approved the US$250 million facility to support the establishment of the Bank 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.
Prior to the ratification of the agreement between Ghana and the IDA by Parliament, Chairman of Finance Committee of Parliament, Dr. Mark Assibey-Yeboah gave a breakdown of the components of the facility which has a 5-year moratorium.
“Mr. Speaker the project has 4 components. There’s a line of credit of $175 million, technical assistance of $10.5 million, partial guarantee facility of $56.5 million, capitalization of the partial credit guarantee facility of $50 million, capacity building of market operators of $1.5 million. Mr. Speaker, the Committee is of the view that the facility will go a long way to improve access to credit to medium and small enterprises as well as open up the economy and the creation of jobs.”
The World Bank Board of Executive Directors on October 29, 2020, approved US$250 million from the International Development Association (IDA).
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.
Ken Ofori-Atta earlier this month noted that the National Development Bank is set to take off from January 2021.