As an integral part of the Government’s GH¢100-billion Ghana CARES ‘Obaatampa’ project, the Minister for Finance, Hon. Ken Ofori-Atta, announced in May this year the securing of €170million funds from the European Investment Bank for the establishment of a National Development Bank Ghana (DBG) with focus on providing long-term affordable credits in Agri-business, Manufacturing, ICT, Tourism, and Housing.
According to the Finance Ministry, the agriculture and manufacturing sectors receive about 4 percent and 8 percent, respectively, of the bank's loans compared to their shares in GDP and employment and potential for driving economic transformation, hence the need for a financial intermediary to lend on a long-term basis at a much more affordable rate.
Speaking to Real Estate Times Africa on the contractors’ expectations from the yet to be operationalised bank, the Chief Executive of the Ghana Chamber of Construction Industry (GhCCI), Emmanuel Cherry, noted the Chamber is in full support of the government's proposition for the bank, adding that long-term financing availability is the surest way to sustain businesses in the construction industry.
He explained the current financing regime offers no potential for businesses in the sector to access credits and break even let alone make profits.
"Today in our financial market, our lending rate and the period of repayment - some are 6 months, some are one year, some with maximum 2 years - are not favourable. What kind of business are you going to do with these terms in order to break an even with a loan facility of 6 months, one year or 2 years?
"With the development bank Ghana, it is going to give you a moratorium for 5 years for you to take to pay so you can work and trade on that and make a lot profit to start payment," he observed
The President of the Republic, Nana Akufo-Addo, in August this year also bemoaned the high lending rates among commercial banks in the country. At the moment, less than 15 percent of credit facilities given out by banks are for 5 years or longer, making investment in long gestation projects very difficult for the private sector.
"In the construction sector, the industry is capital intensive so with the introduction of DBG, I belief it is a good call. I welcome it and we are ready for it. If it does come on board and provided it will be handled accordingly and efficiently, we are good to go with it," Cherry concluded.
Source: Mohammed Bomanso Issah(Real Estate Times Africa)