Ofori-Atta outlines DBG’s four focus areas

Gov’t to roll out six major expenditure cut measures
Ken Ofori-Atta is Finance Minister

The soon-to-be-established Development Bank Ghana (DBG) will prioritise support for agribusiness, manufacturing, Information Communication Technology (ICT) and mortgage finance, Minister of Finance Ken Ofori-Atta has said.

He said these sectors represent the engines of growth and transformation for a ‘Ghana Beyond Aid’, and that the new lender’s focus will be to provide comprehensive financial support – in a manner never seen before – to spur growth in the said areas of the economy.

On agribusiness, Mr. Ofori-Atta – who spoke during a meeting with the Association of Ghana Industries (AGI) in Accra, said the DBG will focus on off-farm value-chain activities, while the bank’s support for the manufacturing sector will mainly come in the form of long-term credit of up to 15 years.

When it comes to ICT, DBG’s efforts will be centred on software and allied services – including business-process outsourcing, and tourism – with the final focal point being mortgage finance, where it will work to reduce the over 1.7 million housing unit deficit by extending patient capital to make homeownership more affordable for average income earning Ghanaians.

“Ghana Beyond Aid requires economic transformation, modernised agriculture, industrialisation, dynamic firms in the ICT/tech sector and other high-value services, including tourism. This requires medium- and long-term financing at reasonable rates,” he said.

Unfortunately, Mr. Ofori-Atta was quick to add, in Ghana today this is either unavailable or extremely difficult for most firms to get. “Less than 15 percent of loans given out by banks are for five years or longer, making investment in long gestation projects non-viable.”

Explaining further, he said the agribusiness and manufacturing sectors receive around 4 percent and 8 percent respectively of banks’ loans, compared to their share in GDP and employment and potential for driving economic transformation.

Currently, there is also not a single development bank in the country; with the National Investment Bank (NIB) and Agricultural Development Bank (ADB) having been converted to universal banks years ago, with loan portfolios like the other banks in terms of tenure and sector allocation.


“Government, based on the recommendation of a task force of experts, has decided to establish DBG to help address the market failures in Ghanaian credit markets – and thereby increase the availability of medium- and long-term finance to enable Ghanaian businesses facilitate economic transformation and job creation,” he reiterated.

DBG business model

The business model of DBG will not allow it to take deposits. Rather, it will be able to raise its funding from a range of sources: shareholders; sale of bonds; long-term loans (possibly with government guarantee); and re-invested profits. DBG could also receive grants from government and other sources to perform specified services consistent with its mandate.

The DBG will operate as a top-tier or wholesale development bank. By this, it will provide eligible participating financial institutions with tailored financing products and services to encourage them to expand financing for enterprises in the target sectors and market segments. The final piece of the jigsaw is to offer a package of complementary products and services to address existing market failures. This includes medium- to long-term lines of credit; partial credit guarantee facilities; and a digital platform to facilitate supply chain financing, among others.

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