The Development Bank of Ghana (DBG) is about to take off , and as usual, there is so much misconception and lack of information about it , leading to some very interesting commentary and cynicism around it.
One strange retort is, “it will end up like others like it” and “why do we need it in addition to ADB, NIB etc?”. That in itself shows the lack of understanding and knowledge about DBG
DBG is NOT a retail bank like NIB, ADB etc. You CANNOT open an account at DBG. It will NOT have branches around Ghana. It will NOT take deposits and facilitate withdrawals like the normal commercial banks. Etc…. In short , unlike NIB etc, individuals like us CANNOT and will not transact any business with them.
Ghana has NEVER had a National Development Bank before. This is totally NEW so please note.
NEED FOR, AND WISDOM BEHIND DBG
Some constant problems in Ghana over decades have been
1. The lack of access to long term credit/loans for companies.
2. The lack of finance for very important sectors like Agriculture and Manufacturing.
3. The scarcity of housing due mainly to lack of cheap, long term financing for players in that sector, leading to high cost of homes.
4. Acute unemployment especially among the youth.
5. Over reliance on imports , especially of goods we can easily manufacture here with the right factors of production like infrastructure and cheap long term loans.
Though we know all these problems, we have continued to live in a situation where :
* Credit to the manufacturing sector is at a low rate of 8% of all loans.
* Credit to the Agric sector is at a SHAMEFUL 4% of all loans given out in a year.
* 85% of all loans given out in Ghana are for periods not exceeding 5 years. It is RARE to see a 10 year loan facility approved for any manufacturing, real estate or Agric firm in this country.
*To cap it , these loans are damn expensive, interest rates are high.
HOW DBG WILL SOLVE THESE
With an initial capital of ONE BILLION DOLLARS, being provided by Ghana Govt and other Devt partners and the private sector, the DBG will make available to businesses in the manufacturing, agric, real estate, ICT and Tourism sectors, Huge loans and credit with upto 15 Years repayment terms and payment holidays, at cheaper cost.
Thus these sectors mentioned earlier, which are the back bone of every transformed economy in the world, will see a never seen before vibrancy in the coming years..
BENEFITS
*Employment Generation will be massive as companies expand and new ones are set up in all the sectors mentioned above
*This in turn will lead to massive employment generation especially in the Agric, manufacturing and real estate sectors.
*The problem of lack of value addition to our raw materials will be solved to a high extent with the expansion of existing and setting up of new agro processing industries.
* With import substitution based manufacturing and also the value addition to export oriented agric and other produces, the Cedi will maintain even stronger stability against the USD and other currencies than we are seeing today.
* Similar benefits we can all imagine will be felt in the housing sector, Tourism sector, ICT sector etc, all as a result of setting up the DBG.
CONCLUSION
This bank has been on the drawing board for 3 years and extensive work has been done on it.
The World Bank, European Union and other International Institutions and Governments are so impressed by it that The European Union, through its European Investment Bank in Belgium, has given its HIGHEST EVER financial support in any African country since it was set up, to Ghana and the DBG.
We are often told to compare ourselves to and copy Asian Tigers and other giants. Note that Japan, Korea, Singapore etc set up Development Banks like DBG and the resultant benefits are very well documented for any interested party to read about.
Rome was not built in a day. This Govt came to meet a mess. They have done very well to correct a lot of fundamental problems like cleaning up the banking/financial sector, reducing interest rates, taming inflation, gradually reducing and finally arresting the Cedis Depreciation (zero Depreciation against the Dollar for a whole year now, never seen since Kufuor’s time in 2006) etc.
As for the Ghana Card and what it is coming to do to transform our economy I need a whole post on it.
The serious reduction in Govt Receivables due to Covid, which also demanded the borrowing of massive funds to fight it, have however increased our Debt to GDP ratio but Nana said and has proven that they know how to raise the economy back to great heights. The DBG, which is linked to the 100 BILLION CEDIS Obaatanpa (Ghana Cares Initiative) bears testimony to this.
The successful setting up of the DBG has given me renewed hope and trust in Nana Addo and his most likely successor Bawumia, and I will encourage all objective, patriotic citizens to read more about these things, offer CONSTRUCTIVE, OBJECTIVE and HONEST criticism where needed, but focus on encouraging Govt to focus on what it is doing and implement well. And we must also seek knowledge and information about issues before criticising.
In a decade or two, students will be reading about the Great Transformation under Nana Addo and Bawumia. MARK IT !
By: Kwaku Addai Tardieh[ads5]
