The African Development Bank has taken a strategic step toward promoting industrialisation and private sector development in Ghana by providing financial and technical support to the Development Bank Ghana (DBG).
African Development Bank Vice President for Private Sector, Infrastructure and Industrial Complex, Solomon Quaynor, spoke out on the issue in a recent interaction with the media.
Here are some of his takeaways.
“Our strategy in Ghana as the African Development Bank includes supporting Ghana’s industrialisation and private sector development.”
Quaynor explained that the African Development Bank’s support is being provided in a number of ways. This includes the provision of a US$40million grant to the government of Ghana by way of investor’s equity to DBG to contribute toward capitalising the institution. The Bank will also nominate a board member to deepen the governance process of DBG – of which it has been a part from the beginning, especially with the leadership recruitment process.
“The government of Ghana has put out a ‘Beyond Aid’ vision, and this is really something that we are very supportive of – particularly in the context of post-Covid recovery whereby we have to rapidly create jobs,” Quaynor said.
Quaynor emphasised jobs creation as an important pillar of support. “Ninety-eight percent of the private sector in Ghana, I understand, is micro, small and medium enterprises (MSMEs) and this creates 83% of jobs. Therefore, increasing access to finance for the SME space, where there has really been a finance gap, should begin to actually provide more resources for these MSMEs to grow, enhance their operations and create more jobs.”
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.
Quaynor said: “The African Development Bank essentially expects to reduce the access-to-finance gap for MSMEs in Ghana in another 3 to 5 years; and we do hope the Development Bank Ghana will provide a lot of funding to financial institutions, both commercial and non-banking institutions, to on-lend to MSMEs over the period”.
He warned that this in itself will not be enough. “So, we specifically want to ensure that the lending goes to MSMEs which can stimulate and increase jobs for Ghanaians. For us, it is about access to financing and creating jobs – which is really the ultimate goal.”
The African Development Bank’s view is that good governance and robust internal structures are key to putting DBG on the right path to success in supporting industrialisation and private sector development in Ghana,” he said.