Ghana to receive $40m grant from AfDB to finance Development Bank

Last month, the Board of Directors of the African Development Bank Group (AfDB) approved a $40 million grant from the African Development Fund to capitalize the Development Bank of Ghana (DBG).

The AfDB announced the grant approval in mid-November 2021.

The Ghana government announced this year that it was starting the DBG with an initial equity contribution of $250 million of which $200 million had already been paid.

According to the Finance Minister, Ken Ofori-Atta, the financing was to increase DBG’s lending capacity by raising additional funds from domestic and international private and institutional investors.

He told the press in Ghana that the World Bank had provided $250 million and KfW of Germany had also provided €46.5 million.

He indicated that the primary focus areas of the DBG would be: Agribusiness, with a focus on off-farm value-chain activities, manufacturing, ICT, software, and allied services, including business-process outsourcing, and tourism boosting, home ownership through affordable and longer tenure Mortgage Finance.

According to the AfDB, the DBG is designed to provide financing to micro, small and medium sized enterprises as well as small corporates in agribusiness, manufacturing and information and communication technology (ICT).

Commenting on the approval, the AfDB’s Director General for West Africa, Marie-Laure Akin-Olugbade, said: “The project to support the DBG is aligned with Ghana’s Beyond Aid Vision and supports the Government’s efforts to revitalize the economy post-COVID-19.”

The AfDB’s Country Manager for Ghana, Eyerusalem Fasika said the DBG is expected to impact Ghana’s thriving private sector, which can drive economic growth and deliver shared prosperity.

Stefan Nalletamby, Director, Financial Sector Development Department said: “The DBG project is another example of the Bank Group’s strategy to support African countries to establish new development finance institutions whose designs and structures are aligned with international best practice standards.”

Even though the DBG was initially set to be established in July 2021, it received its provisional license for operation from the Bank of Ghana in early September.