Prof. Ernest Aryeetey is a former Vice-Chancellor of the University of Ghana-Legon
• A former UG Vice-Chancellor has called for the DBG to run independently
• He believes the operations of the bank will fail if it’s plagued with political and civil interference
• The DBG will provide lending support to critical growth sectors
A former Vice-Chancellor of the University of Ghana-Legon, Professor Ernest Aryeetey, has cautioned against political and civil interference in the establishment and operations of the National Development Bank.
According to him, the bank must run autonomously to serve its intended purpose of lending to critical growth sectors of the economy.
Speaking at a public forum organised by the Institute of Statistical, Social and Economic Research (ISSER), Prof. Aryeetey said lessons must be learnt from previously established banks that failed as a result of poor corporate governance structures.
“If Parliament wants to control the Development Bank, it will fail. If civil servants want to control the bank, it will fail. If individual businesses want to control the bank, it will fail. We need to craft a governance system that takes into account all the above interests and still remains independent,” Prof. Aryeetey said.
Despite backing the idea of establishing a National Development Bank, the former UG Vice-Chancellor pointed it will survive if it adopts stringent corporate governance structures and runs independently.
He further called for a broader conversation on organizational arrangements to address risks associated with long-term financing in Ghana.
“The bank is being presented as an effort to tackle many of the problems associated with development banks in the past but there is little being said of insurance for long-term financing unlike it is done in other parts of the world.” he admonished.
The move to set up the Development Bank Ghana was first announced in Parliament by the Finance Minister, Ken Ofori-Atta in 2019.
Most recently in May this year, Ghana secured recently secured a €170million facility from the European Investment Bank for the establishment of the Development Bank of Ghana (DBG).
According to Ken Ofori-Atta, DBG will help address two important constraints in the country’s financial system: namely, lack of long-term funding, and the lack of adequate funding to productive sectors of the economy.
The banks’ primary focus areas will be agribusiness, with a focus on off-farm value-chain activities, manufacturing, ICT, software; and allied services including Business-Process Outsourcing, tourism, and boosting home-ownership through affordable and longer tenure mortgage finance.
Government on its part said it aims to increase the DBG’s lending capacity by raising additional funds from domestic and international private and institutional investors.