KfW, the German development bank, has reaffirmed that its partnership with the Development Bank of Ghana (DBG) aims to provide much-needed support to the small and medium-sized enterprise (SME) sector and thereby promote the sustainable development of the Ghanaian economy. based on a model similar to his.
Specifically, this partnership was built to enable DBG to provide longer-term financing to the private sector, particularly SMEs in the agribusiness, manufacturing, high value-added services and ICT sectors. .
With this support, KfW, the development finance arm of the German government, will help SMEs make productive investments to retain and create jobs for the country’s youth.
Commenting on the partnership in a statement released in Accra yesterday, KfW Accra National Office Director Arndt Wierheim said: “KfW is undertaking financial cooperation on behalf of the German government and we believe that DBG is a national bank. development in Ghana is perfectly suited to support SMEs.”
“We are very happy to implement our model with our Ghanaian partners here in Ghana. History shows that over its 70 years of implementation, the KfW model has been very successful in building a solid foundation of SMEs , which is necessary for any strong economy and that is what we are trying to do in Ghana. KfW supports DBG on the path to more sustainable and dynamic socio-economic growth in Ghana, which will lead to the creation of more jobs,” he said.
“From this point of view, we hope that with our support to DBG, we can grow and give more life to the reform and investment partnership that the governments of Ghana and Germany signed a few years ago. , where DBG will be a very strong pillar. . We hope that DBG will be successful as KfW has been successful over the past 70 years in Germany,” he added.
On behalf of the German government, KfW provided 46.5 million euros in the form of a subordinated loan on favorable terms. In addition, a grant of 3 million euros for technical assistance is granted to DBG in favor of SMEs.
The model that KfW supports in Ghana is similar to the one it implements for its national activities in Germany. Based on this model, KfW lends to DBG who will in turn lend to Participating Financial Institutions (PFIs) or commercial banks who will ultimately lend to SMEs.
The Federal Republic of Germany, through financial and technical cooperation, has provided considerable support to the Government of Ghana over the years. This has been in three critical areas. One area is energy. The second is governance and the third is sustainable economic development.
Mr. Wierheim explained that “under this third pillar, we are trying to support access to finance in Ghana; to support and finance SMEs through the financial sector and DBG, as a new center of interest in us in Ghana, try to do it”.
However, KfW’s support for DBG is broad and not just in the areas of financing and technical assistance. As part of KfW’s support to DBG, there is an integrated governance structure reflecting international best practice which aims to ensure that the expected support to SMEs does not encounter any challenges or bottlenecks.
This is possible because KfW, together with other development partners such as the World Bank and the European Investment Bank (EIB), has been involved from the start in the design of DBG’s governance structure.
According to Arndt Wierheim, “We have a very thorough monitoring and reporting system in place which we do for all our projects, but, in particular for DBG, which is also very important for us. We have annual progress missions in Ghana from our headquarters to see We expect several things and one thing is to have a sister organization in Ghana that operates in the same way as KfW so that we can work at the same level.
“We have a common goal and we have a similar structure. For us it is not only important to have implemented very ambitious policies and support mechanisms for SMEs. We need a partner like DBG to grow together and support Ghana,” he said. .