Ghana’s planned development bank won’t reach its full potential unless it can break with the culture of institutional appointments being used as a form of political patronage. In May, the finance ministry agreed to a loan of $207m from the European Investment Bank to finance a new national bank – the Development Bank of Ghana. The new institution, to be set up in July, is also backed by the World Bank and the German development bank KfW. The new bank will aim to tackle the dearth of long-term financing for industry and agriculture. Ghana’s finance minister, Ken Ofori-Atta, says only 15% of bank loans are for five years or longer, stifling investment in long-term projects. The EIB backing represents the largest ever engagement in Ghana by the world’s largest international public bank and most significant support for a national development institution in Africa. Once operational in the coming weeks the National Development Bank of Ghana will increase access to long-term finance and boost job creation for thousands of businesses in key sectors, including agribusiness, manufacturing, ICT tourism and other services across Ghana. The new National Development Bank of Ghana will provide long-term wholesale financing, including working capital and investment loans, to the private sector through commercial banks. The new institution will transform access to finance by small business and larger companies across Ghana and unlock investment in agribusiness, manufacturing, informational technology and tourism.
SOURCE: THE AFRICA REPORT