Creation of Development Bank-Ghana will see a reduction of interest rate among businesses – Ofori-Atta

• The establishment of the bank is expected to reduce interest rates among banks

• Ken Ofori-Atta said a substantial capital injection will go towards system and operations of the bank

• Close sources in government say the bank will commence operations with a seed capital of US$1 billion

The establishment of the Development Bank Ghana is expected to yield a reduction of interest rates among Ghanaian businesses, Finance Minister Ken Ofori-Atta has assured.

According to him, the possible drop in the interest rates will be as a result of the capital injected into the financial system and operations of the bank.

Addressing journalists at a press briefing in Accra on May 20 after Ghana secured some €170 million from the European Investment Bank for establishment of the bank, Ken Ofori-Atta is optimistic the move will see a reduction in the interest rates.

“The interest rate issue has really been bedevilling for us. We came close to 30 percent or so and then it came to 23 percent, now I think we are around 18 percent. That is not great, but you can see the gradual fall. I think naturally as we begin to see more resources in which we are on-lending to these institutions, one will have the banks adjust because there is more capital, and we hope that the market will drive it down,” he said.

Explaining how the bank will operate, the Finance Minister said it will focus more on lending to institutions and support for key growth sectors instead of functioning as a deposit-taking institution.

He added that the bank will mobilize funds from individuals and business consumers for on-lending to micro, small and medium scale enterprises with a focus of providing support to private sector, agri-business, manufacturing and ICT initiatives.

Already, close sources in government say the bank will commence operations with a seed capital of US$1 billion. The amount is expected to come from government, development partners and secondary donors.