The Deputy Chief Executive of the Development Bank of Ghana (DBG), Michael Mensah-Baah says procedures are underway to roll out a new guarantee product for commercial banks.

According to Mr Mensah-Baah, the Partial Credit Guarantee product is to encourage private financial institutions to invest in local ventures that would help build the economy.

The Deputy CEO who was speaking at the DBG-UGBS Development Finance Series on Tuesday stated that although DBG is fully equipped to invest in local businesses, he believes commercial banks have a significant role to play.

“We also want to encourage the PFIs or banks to also use their own funding to invest. And one way of doing that is to share the risk of the investment with them.

“So the Partial Credit Guarantee product allows the Banks to invest in certain risk areas such as agribusiness and allows them to share the risk with us by so doing the banks themselves will use their own funding and together we’ll be able to make a much more significant impact,” he said.

Already the Development Bank of Ghana has announced its interest to bridge the financial gap facing the agricultural sector in the country.

Touching more on this intent, Mr Mensah-Baah said his outfit has invested GH₵300 million into agribusiness, manufacturing and tourism.

He noted that the Bank seeks to invest over GH₵500 million into four value chains – poultry, rice, maize and soybean – to ensure food security.

Reacting to the introduction of a guarantee product, the Managing Director of CBG, Daniel Addo considered it a very thoughtful step.

He explained that the policy would bring about risk sharing, therefore, commercial banks would unlock their liquidity when investing.

“The guarantee will allow me to go out and lend more, much more than I normally will if I was worried about credit risk.

“So it is great. And it is not about PFIs abdicating credit risk, but about PFIs sharing risk with DBG,” he stated.

The Development Bank of Ghana and the University of Ghana Business School, today, signed a Memorandum of Understanding (MoU).

Themed, ‘Deepening Development Finance Knowledge, Innovations and Impact’ the two parties seek to gather evidence-based research on the core issues the country faces and explore tailor-made solutions to address them.