Social mandate of DBG should not override commercial interest – Dr Fiador
A senior lecturer at the Department of Finance of the University of Ghana, Dr Vera Fiador, says even though the Development Bank Ghana (BBG) is being established with a social mandate of providing capital for specific sectors of the economy, investment drawings from the bank must also be financially sustainable.
DBG is being established to help the country to quickly recover from the effects of the COVID-19 pandemic.
The bank is to help address the challenge of long-term funding, and the lack of adequate funding to productive sectors of the economy like agriculture and ICT development.
Speaking at a Development Dialogue organised by the Institute of Statistical, Social and Economic Research (ISSER) on National Development Bank and Sustainable Financing in Ghana, Dr Vera Fiador said the social motive of the bank should not override its commercial decisions.
“We understand the bank, being a development bank, would have some social interest so that it is able to provide patient capital for industries that will not be attractive to traditional commercial banks, but the decisions must not override the commercial interest,” Dr Fiador noted.
She also commended the approach taken to establish the bank, saying “it is the ideal thing to avoid mission creep or drift”.
The Ministry of Finance signed an agreement with the European Investment Bank (EIB) for €170 million for the establishment of a Development Bank in Ghana.
The bank is expected to be an independent wholesale financial institution with a narrow focus on developmental investments, working through traditional commercial banks.
The World Bank Board of Executive Directors approved US$250 million from the International Development Association (IDA) to support the establishment of the Development Bank of Ghana (DBG) 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.
The Ghana Development Finance project is expected to increase the number of viable Micro, Small and Medium Enterprises (MSMEs) with access to long-term financing. It will provide financial services to about 10,000 enterprises, including 2,000 women led MSMEs, and therefore contribute to economic growth and diversification.
The project will also strengthen the oversight of development finance institutions and the adoption of Environmental and Social standards by financial institutions.
In addition, DBG will finance multiple interventions to attract private sector financing for credit constrained MSMEs and small companies based in Ghana.
