The Head of Financial Institutions at the Ministry of Finance, Sampson Akligoh, has disclosed that the government is taking a number of steps to ensure that the yet-to-be-formed National Development Bank – Ghana (DBG) becomes independent and credible.
According to him, the government is focusing on forming a bank that will stand the test of time.
He made the comments when he contributed to Impact Investing Ghana (IIGh) and Citi TV’s first-ever public Dialogue Series on the Development Bank on Thursday, June 17, 2021.
He said the government is doing everything possible to make sure the financial institution has independent board members who will discharge their duties professionally.
“We have actually taken our time to make sure that as humanly as possible the government checks the processes leading to the formation of this bank so that we have a credible institution that is independent and has the adequate human resources that can do things differently from the past. This includes the appointment of independent boards and the Act that will establish it, which has been registered with the Registrar-General.”
On the sustainability of the bank to ensure that it does not struggle like some existing public institutions that subsequently become a burden on the government, Mr. Akligoh said strategies are being adopted to make sure the Development Bank does not fail.
Mr. Akligoh used the opportunity to encourage investors to contribute their quota to ensure the bank becomes successful.
“We can take a lot of short-term decisions and say let’s improve our addressing system but if you don’t have right cooperate governance in place, we don’t have better marketing strategies, we don’t have capital budgeting frameworks then the business cannot grow. In every country, the venture capital and impact investing people are those that support the ecosystem.”
“So I will challenge the impact investing ecosystem that they must be ready for the National Development Bank to be meaningful and create an impact and I will welcome an immediate conversation as to how they can be ready.”
About the National Development Bank
The Ministry of Finance and the European Investment Bank on May 19, 2021, signed an agreement for the provision of €170 million facility for the establishment of a new national bank.
DBG is an integral feature of the GH¢100 billion Ghana Cares ‘Obaatampa’ Project, which is seeing to the revitalization of the Ghanaian economy following the onset of COVID-19.
Finance Minister, Ken Ofori-Atta, had earlier given further clarification for government’s decision to set up the bank.
According to him, the bank will help address important constraints in the country’s financial system, including the lack of long-term funding, and the lack of adequate funding to the productive sectors of the economy.
Mr. Ofori-Atta insisted that DBG will not be similar to existing commercial banks in the country.
“It is a non-deposit-taking wholesale bank. DBG will neither give retail nor direct business loans, like the former Bank for Housing and Construction, NIB, ADB, and the like.”
“It will rather provide funds to the existing commercial banks, and other qualifying financial institutions, to provide long-term lending and other innovative products that are presently lacking in the system. The bank will therefore complement and strengthen the operations of existing financial institutions,” the Minister said.
Primary focus areas of DBG will be:
- Agribusiness, with a focus on off-farm value-chain activities
- ICT, software, and allied services, including Business-Process Outsourcing, and Tourism
- Boosting homeownership through affordable and longer tenure Mortgage Finance
“Government, therefore, expects DBG to be a financially sustainable institution that is able to raise long-term funds from the domestic and international capital markets and from international financial institutions, based on its own balance sheet.”
“To this end, the Government is taking pains to ensure that DBG has a strong governance structure with professional and independent Board and Management. A process to select the Board and Management on a competitive basis is currently underway,” the Ministry of Finance noted in a statement.