Parliament has approved a US$30m facility from the International Development Association (IDA) to finance the Financial Sector Development Project (FSDP), which aims at supporting government’s vision of making a broad range of affordable, high-quality and formal financial services and products available to Ghanaians.

According to the Finance Committee of parliament’s report on the financing agreement between government and IDA of the World Bank Group, it is expected to lead to an increase in a number of village savings and loans associations’ access to formal financial services, raise consumer awareness and ensure faster handling of financial consumers’ complaints by regulators.

The Committee indicated that benefits to be derived from the project when completed include: enhanced supervision and coordination among all financial sector regulators; enhanced specialised deposit-taking institutions; and credit union regulatory and supervisory framework and resolution capacity.

Other benefits have to do with the increased reporting credit of unions to cooperative credit union associations; improved quality of credit unions financial information; and reduction of the time required to complete onsite examinations.

The terms of the loan are as follows: loan amount US$30m, grace period (moratorium) 5 years, repayment period 25-years, service charge 0.75 percent per annum, interest charge 1.25 percent per annum, and a concessional rate of 33.23 percent.

The project consists of four main components, including improving financial sector regulatory oversight; market transparency and discipline (US$8m), which will support the BoG and MoF to improve oversight of SDI’s market transparency and discipline.

There is also a component that seeks to increase the outreach of rural community banks (RCBs) and micro finance institutions (MFIs), and link village savings and loans associations (VSLAs) to the formal financial sector (US$13m). Under this component, there is upgrading of ARB Apex’s Systems and ICT platforms to support the introduction of digital financial services and accommodate banking agent services.

Another component is bolstering financial capability and consumer protection (US$3.6m). The objective of this component is to bolster financial capability and consumer protection, and contribute to both financial stability and inclusion.

Furthermore, the other component is to enhance capacity for the implementation and monitoring of financial sector policies and supporting project implementation, which will support capacity building of the MoF’s financial sector division.