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.”
World Bank Supports the Establishment of the Development Bank of Ghana to Boost Access to Finance and Job Creation
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.
Finance Minister Ken Ofori-Atta earlier this month noted that the National Development Bank is set to take off from January 2021.