According to Daniel Wilson Addo, the Managing Director of Consolidated Bank Ghana Ltd. (CBG), his organisation is committed to strengthening its partnerships with Development Bank Ghana (DBG) in order to facilitate and support long-term credit flow and promote economic growth among Ghanaian businesses.
In response to a question about the partnership’s significance, Mr. Addo stated, “DBG has a large bold ambition to address extremely significant concerns within the business sector. We are all aware of the value of supporting SMEs to Ghana’s economy, and CBG is pleased to partner with DBG since we are dedicated to seeing SMEs flourish in Ghana.
“As part of a programme aimed at empowering SMEs financially, we collaborated with DBG to teach 160 SMEs in the Foundational Financial Literacy Course, adding to our long list of SME assistance initiatives. As the catalytic areas of the economy highlighted by DBG, we at CBG look forward to strengthening our partnership with DBG to provide on-lending to Ghanaian businesses in targeted industries like agribusiness, manufacturing, ICT, and high-value services, he said.
In his keynote address at the DBG-University of Ghana Business School (UGBS) Development Finance Series MoU Signing and Roundtable Meeting, which was held at the University of Ghana, Mr. Addo also urged the Development Bank of Ghana (DBG) to maintain its focus on serving as a market participant who provides long-term capital to businesses in Ghana.
However, he asserts that DBG is not required to maximise profit; rather, the institution must work to maintain financial stability with less reliance on government capital infusion and make sure funds advanced to Participating Financial Institutions are repaid when required in order to assist DBG in capital recycling.
According to him, though, DBG is not required to maximise profit, the institution must work to remain financially sustainable with less reliance on capital injection from the government and ensure funds advanced to the Participating Financial Institutions are repaid when due in order to help DBG recycle capital.
“By the very nature of National Development Banks (NDBs), they are not required to be profit maximisers. However, to effectively discharge their mandates and limit the recourse to scarce public funds, they must be financially sustainable. In a 2021 research report, Fitch estimated that one-third of 84 African NDBs posted losses in 2019 and the trend continues”.
“Whilst NDBs are not profit-driven, consistently posting losses raises the need for continuous capital injection from a government that already has very little fiscal space to operate. This then opens the institution to government interference. To counteract this, DBG will have to manage its funding costs, operate at high levels of efficiency, and as much as possible employ funding structures that minimize credit losses”, he advised.
He added that it was also necessary for CBG to carefully identify the sectors where it could make the most impact and focus its lending and advocacy efforts appropriately.
Since CBG’s inception, the bank has granted over GHS 1.5 billion to the SME sector, provided an SME Center dedicated for advisory services, introduced a program dubbed the CBG Adesua Series, partnered with Ghana Enterprises Agency (GEA) to disburse concessionary loans totaling GHS 154 billion to 34,000 SMEs; German International Cooperation (GIZ) to train 500 artisans; and GIRSAL in supporting the agricultural sector.
