Ghana to set up national development bank to support economy

3 Nov 20

A new development bank is to be established to help the Ghanaian government boost specific sectors of its economy, after the country obtained a loan from the World Bank.

 

Around 10,000 businesses in industry sectors such as agribusiness, manufacturing and high-value services are expected to benefit from financing provided by the Development Bank of Ghana, which will be established in 2021.

“By offering long-term wholesale financing, credit guarantees and other services, [the project] will help increase overall lending to priority sectors and market segments,” said Pierre Laporte, World Bank country director for Ghana, Sierra Leone and Liberia.

Ghana “is one of the few” African countries to successfully achieve a democratic transition in the past 30 years, a World Bank document stated.

It consistently ranks highly on issues such as freedom of speech, and political stability allowed it to achieve ‘lower middle income’ status in 2011.

But the west African country then underwent a period of weak fiscal governance, the document continued, and growth slowed until 2016.

Ghana’s economy remains undiversified, with about 40% of the labour force in non-wage agriculture, and most urban workers in informal jobs.

Micro, small and medium enterprises are the main formal employer, and the government hopes to use the development bank to create more employment in this part of the economy, which is more productive than the informal sector.

The $250m loan from the World Bank will go towards setting up the bank, as well as strengthening oversight of Ghana’s development finance institutions and the creation of environmental and social standards for financial institutions.

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