STORY: A new Ghanaian development bank aims to lend $600 million to small businesses over the next one to two years, its chief executive has said.
The Development Bank of Ghana or DBG, officially launched on Tuesday (June 14), aims to help meet demands for credit and contribute to growth in the inflation-wracked West African country.
Speaking before the launch, CEO Kwamina Duker said there is very little long-term financing available to allow small and medium size enterprises to grow.
Companies with 100 workers or less struggle to get loans in Ghana, with a World Bank report estimating the gap between supply and demand was equivalent to 13% of GDP in 2017.
DBG is owned by Ghana's government which is putting in $250 million of equity.
The African Development Bank is providing $40 million and the World Bank is lending $200 million.
The European Investment Bank and Germany's development agency KfW are putting in $178 million and $49 million respectively.
Duker said DBG would lend between $5 million and $30 million to commercial banks.
They in turn would make three to 15-year loans to small companies, ranging from $25,000 to $3 million.
Duker declined to share details of interest rates, but said they would be lower than those currently available commercially.
Inflation in Ghana rose to a new 18-year high of 27.6% in May and interest rates were hiked 200 basis points to 19% the same month, to try to stem the rise in prices.
Duker said that makes it a difficult environment but it means it's also "absolutely" the time when a development bank is needed more than ever.