The Ministry of Finance (MoF) has received financing from the World Bank towards the cost of the preparation of the Development Finance Project (the Project), which supports the establishment of the Development Bank, Ghana (DBG) and the design of its future products and services
The proposed project will be implemented at the national level and its overall development objective is to increase access to finance for Ghanaian enterprises, particularly small and medium enterprises (SMEs). The primary beneficiaries will be creditworthy businesses, particularly SMEs, that lack access to finance to explore growth opportunities. Women-owned/led SMEs (WSMEs) will be particularly targeted by the project. The DBG will provide lines of credit and Partial Risk Guarantees to eligible Participating Financial Institutions (PFIs). The PFIs will finance eligible and creditworthy enterprises operating nationwide across sectors such as agriculture and manufacturing. In addition, the project will provide technical assistance to financial institutions that are interested in expanding their lending to businesses, particularly SMEs and WSMEs. The Project has four components as follows: (i) Line of Credit Facility and Related Technical Assistance; (ii) Partial Credit Guarantee Facility, Digital Financing Platform, and related Technical Assistance; (iii) Capital Market Development; and (iv) Project Management, Monitoring, Reporting and Evaluation.
The main Environment and Social (E&S) risks of this project relate to the ability of DBG to properly identify and manage the E&S risks and impacts associated with its lending activities particularly to the PFIs. The PFI’s in turn need to manage the E&S risks associated with their portfolios. Environmental risks associated with enterprises in the manufacturing and agricultural sector may include deforestation, forest and land degradation, water pollution, erosion, soil contamination, threat to native biodiversity, as well as health and safety risks associated with the use of agricultural inputs such as pesticides and fertilizers. The social risks associated with the lending may include land acquisition, child labor, wage labor, gender inequalities, potential influx and community health.
The project design and implementation will be guided by the World Bank Environmental and Social Framework (ESF) and will comply with all relevant legal requirements in Ghana. Under the ESF, the Environmental and Social Risk Classification (ESRC) for the project is substantial and the project design and implementation will particularly be governed by ESS 9 which establishes standards for Financial Intermediaries (FIs). In addition to the E&S Standards of European Investment Bank and KfW Development Bank’s Sustainability Guideline, the following Environment and Social Standards (ESS) are considered relevant (but not limited to) for this project: