The Development Bank Ghana (DBG) has announced plans to invest GH¢500million in four key commodities including soya bean, maize, rice and poultry, by the end of 2023.
DBG has announced plans to introduce a partial credit guarantee product to the market this year, as part of plans to encourage more investments in high-risk sectors of the economy like agriculture.
The partial credit guaranteed product will allow financial institutions, particularly banks, to invest in risky sectors such as agribusiness while sharing the investment’s risk with banks.
The move is in line with DBG’s plan of encouraging commercial lenders to use their own funds to invest in high-risk areas while spreading the risk burden.
DBG’s deputy Chief Executive Officer (CEO), Michael Mensah-Baah, stated that the move will also enable it to signal banks that it is in favour of risky assets which could positively impact the economy, such as agribusiness, which are believed to be areas where the impact can be more significant.
Cumulatively, DBG will have invested about GH¢800million by the end of 2023 in various sectors since its launch in June 2022.
The bank aims to make long-term, competitively priced loans available to small- and medium-sized businesses in Ghana to relieve the bottlenecks affecting availability of such loans.
“We don’t intend to use only our funding to intervene in the market. We also want to encourage the Participating Financial Institutions (PFIs) or banks to also use their own funding to invest; and one way of doing that is to share the investment risk with them,” Michael Mensah-Baah explained.
The partial credit guarantee scheme is appropriate for sectors like agri-business that traditional commercial financial institutions deem risky. With the arrangement, it is therefore hoped that lending to agri-business ventures will not be considered too risky to invest in since the burden will be shared by DGB and participating financial institutions.