Kenneth Ofori-Atta (R), Ghanas Minister of Finance, shakes hands ith Dr Akinwuni A. Adesina (L), president of the African Development Bank Group during a ceremony for the signature of the Ghana Solar Photovoltaic-Based Net Metering Project in Accra, Ghana, on May 25, 2022. – The Solar Photovoltaic-Based Net Metering Project is to support renewable energy in Ghana and the African Development Bank is the lead Multilateral Development Bank (MDB) for the Ghana SREP programme. (Photo by Nipah Dennis / AFP) (Photo by NIPAH DENNIS/AFP via Getty Images)

LONDON, June 14 (Reuters) – A new Ghanaian government-owned development bank aims to lend $600 million to small businesses over the next one to two years, its chief executive said, to help meet demand for credit and contribute to growth in the inflation-wracked west African country.

The World Bank, Germany’s development agency KfW, the European Investment Bank (EIB), and the African Development Bank (AfDB) have also put in funds, the Development Bank of Ghana CEO Kwamina Duker told Reuters ahead of its official launch on Tuesday.

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.

“(There is) very little long-term financing available, at rates that will allow our SMEs (small and medium enterprises) to grow,” Duker said.

DBG is owned by Ghana’s government, which is putting in $250 million equity. The AfDB is granting $40 million, while the World Bank is lending $200 million and the EIB and KfW 170 million euros ($177.7 million) and 46.5 million euros, respectively.

Duker said it would lend between $5 million and $30 million to commercial banks, with four – CalBank CAL.GH, Consolidated Bank Ghana, Fidelity Bank of Ghana FIDELIT.LG and GCB Bank GCB.GH – already signed up.

Those banks would then make three to 15 year loans of $25,000 to $3 million to small companies.

Advertisement

DBG’s aim, which currently has 40 staff, is to raise the proportion of loans given to small businesses in Ghana from around 9% to 15% in two years, Duker said.

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. Read full storyRead full story

“Is this a difficult time? Absolutely,” Duker said. “Is this a time when a development bank is needed more than ever? Absolutely.”

($1 = 0.9566 euros)

(Reporting by Rachel Savage; Editing by Marguerita Choy)

Advertisement