World Bank to Seed Ghana’s Development Lender With $250 Million

ACCRA (Capital Markets in Africa) — The World Bank will provide Ghana with a $250 million credit facility to start its own development bank.

The Washington-based lender is finalizing the terms of the funding with the country’s Ministry of Finance, the World Bank’s office in the nation’s capital, Accra, said in an email on Monday. The World Bank’s board may consider the facility before September, it said.

Ghana’s government said in October that it plans to raise $1 billion for a new development bank that will support small businesses and other lenders. It pledged to contribute $300 million toward the institution, while the rest would be sourced from development partners.

While Ghana has experienced economic growth of more than 6% since 2017, the outbreak of the new coronavirus and a drop in oil prices has seen the government pare back its 2020 forecast to an almost four-decade low of 1.5%. Micro-, small- and medium-sized businesses, which constitute about 90% of all companies in the country, are hardest hit by the health crisis.

When setting up, the Development Bank of Ghana will provide wholesale funding to financial intermediaries, such as savings and loan companies, so that these could be extended to smaller enterprises, the World Bank said. It would also provide credit guarantees to encourage financial institutions to help borrowers who don’t have collateral, the multilateral lender said.

Source: Bloomberg Business News