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Opinions of Friday, 21 May 2021

Columnist: Oheneba David Antwi

Establishment of a development bank in Ghana is long overdue

Ken Ofori Atta - Finance Minister Ghana Ken Ofori Atta - Finance Minister Ghana

On Wednesday, May 2021, The President of Ghana, Nana Addo Dankwah Akuffo Addo on his official tour in Belgium secured a €170 million facility from the European Investment bank for the establishment of the Development Bank Ghana(DBG).

Historically, the establishment of development banks dates back to 1960, to help the developing countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty and improve poor people’s lives. Development banks are one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Over 1.6 billion people live in developing countries. Since 1960, these people have been supported by development banks in 113 countries. The Annual commitments have been an average of $21 billion over the last three years, with about 61 percent going to Africa.

The announcement of the facility received by the government has come under serious attack by a section of the population who lack a proper understanding of the role of development banks in developing countries like ???????? .

I would like to offer a free tutorial for people who lack a basic understanding of how the banking sector works.

The primary role of banks is to support the economic system by acting as a mediator between depositors and loan seekers, banking is essential for the development of a country, it serves as the backbone for the economy, without banks our economy will be in shambles.

There are types of banks but I would like to stress much on commercial banks and development banks, my focus on these two banks are people linking the Consolidated bank Ghana to the Development Bank Ghana.

Let's get the understanding of a commercial bank as a bank that provides financial services to industries and individuals, Commercial banks are formed under Companies act, commercial banks seek to maximize profits, funding for commercial banks are through investments and monies deposited by depositors. Example of such banks are; CBG and GCB.

While A development Bank is set up to provide funds for infrastructural and economic development since they have a broad or long-term developmental agenda. development banks are formed under Special Act findings are raised through selling of securities and borrowing with a little or minimum interest and a long term payment plan their main or target groups are the government and corporate entities.

Development banks are concerned or focused more on development. We have many types of development banks but would like to stress more on just two of such banks in Ghana the ADBG and Exim bank Ghana.

The Agricultural development bank is a bank device and provides specialised schemes for farmers and other primary sectorial needs.

Export-Import Development Bank of Ghana Is also a bank that function as overseas financial institutions assisting cross border trade and investment in trade capital. for example, Export-Import Bank of Ghana(GEXIM Bank).

The Ghana Development Finance project is expected to increase the number of viable Micro, Small, Medium and Enterprises (MSMEs) with access to long-term financing. It will provide financial services to about 10,000 enterprises, including 2,000 women-led MSMEs, and therefore contribute to economic growth and diversification. The project will also strengthen the oversight of development finance institutions and the adoption of Environmental and Social standards by financial institutions

In 2002, the NPP government merged three financial institutions to form the
EDAIF (Now GEXIM Bank) was established under Act has seen series of amendments, in 2016 it was amended under GEXIM Act 911 and since its new act (Act 911) the Ghana Export-Import Bank have facilitated the construction and expansion of 25 new factories.

Ghana is currently doing very well in terms of exports and imports because of the support from the GEXIM Bank.

No country in the world can grow or develop without a development bank.
The development bank will focus on creating a more conducive climate for the sharing of ideas, wealth and specializes areas of the economy. Is common for people to confuse development banks with that commercial banks since they work separately

West African development and investment bank supported our own consolidated bank Ghana with $50m to help support road contractors!

This flowering package informs the mind of key roles development banks play in any economy. The establishment of this bank won't only help develop Ghana but will position Ghana very well in the financial and economic sector.

Let's ignore people with proper understanding of the banking sector trying to display their gross ignorance in the media space.

Congratulations to the President of the Republic of Ghana and the Ministry of Finance for such a great initiative,indeed Ghana is been fixed