The CEO of the Chamber of Agribusiness, Anthony Morrison is calling for clarity on the establishment of the new national bank, the Development Bank Ghana (DBG). According to him, there is no clarity on the the establishment of the new National bank.
“So what is the clarity for the establishment of the bank? The clarity is not there “.
Even though the government is making efforts to explain the essence of the new bank, most people still do not see the relevance of the bank. Several Ghanaians including prominent politicians have publicly criticized the government’s intention to establish the bank.
Need for thorough examination
Minority Leader in Parliament, Haruna Iddrisu for instance, called for a thorough examination of the government’s intention to establish the new bank. According to Mr. Iddrisu, the government should have used the money to support the banks that collapsed during the recapitalization exercise. This, he believes, would have been more profitable than spending those huge sums of money to establish a new bank.
“We need to debate it thoroughly. Why didn’t the Minister of Finance borrow to save those other banks or those other financial institutions in the country? They just needed Four Hundred million for the recapitalization. You have ADB and NIB hemorrhaging financially. Instead of providing liquidity and capital for them, you are borrowing to set up a bank. To do what? What is it that NIB and ADB cannot do if they are given capital support”.
Government’s sensitization
It is interesting to note that these comments came a week after the Finance Minister, Ken Ofori-Atta sensitized the public on the need for the new bank. In his submission, he clarified that the new bank is a wholesale and non-deposit taking bank that requires no branch network to operate. He stressed that the bank will require a minimal staff.
According to the Finance Minister, the DBG will help address two important constraints in the financial system. Key among the constraints he highlighted, is the lack of long-term funding. Also, the DBG will address the lack of adequate funding to the productive sectors of the economy.
More importantly, Mr. Ofori-Atta explained that “it will therefore be very costly to try to convert ADB or NIB into a viable modern development bank”. According to him, the financial cost of doing that is huge and will also result in the closure of branches and employment loss.
Recently, Director of Financial Services at the Ministry of Finance, Mr Sampson Akligoh, also threw more lights on the basis of the establishment of the DBG. According to him, the bank will enhance the capacity of other banks to enable them achieve their objectives.
Also, he educated that the DBG will provide funding to other sector-specific development banks such as the Agricultural Development Bank (ADB). To this end, he described the new bank as “… a superior institution that actually enhances the capacity of ADB to provide financing that is currently not in”.
Current development on the DBG
The DBG is an integral feature of the GH¢100 billion Ghana CARES ‘Obaatampa’ Program. This program seeks to revitalize the Ghanaian economy following the advent of COVID-19. The Finance Minister has assured that the new national bank will be operational by the end of July 2021. The new bank is expected to commence with about $1billion of Funding.
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