Banking Consultant, Nana Otuo Acheampong, has dismissed assertions that the impending National Development Bank is not needed because it will only perform the functions of other existing state-owned banks.
Presenting the 2020 budget in Parliament on Wednesday, the Finance Minister, Ken Ofori-Atta, explained that the bank, which is expected to start operations next year, will be globally rated to enable it leverage foreign capital for industrial and agricultural development.
The bank will be coming at a time when Ghana’s financial sector has been cleaned up with some local banks and other financial institutions losing their licenses.
The initial plan was to merge the Agricultural Development Bank, (adb) and the National Investment Bank, NIB, both state-owned banks, to form the National Development Bank, however that idea has been ditched.
This means the proposed bank will stand on its own while these two banks also stand on their own.
Suggestions are that this will create a needless duplication of roles.
But the Finance Minister says government will provide periodic dedicated funds to the bank for intervention in key areas of the economy; such as large scale agro-processing and housing for economic and social development and jobs.
In an interview with Citi Business News, Nana Otuo Acheampong, said the bank will be able to finance special industries with specific financial needs which the already existing commercial banks have not been able to provide.
“This will be targeting special industries such as agric and manufacturing. Where the government feels that they need capital to be able to develop and that capital will be given as a concessionary rate so if you take an existing bank who is serving capital products at 20%, and then you come in and offer them a credit product that they should give to special industries at say 15% percent, it will be very difficult for them to forego their product and sell your product; because of that, it becomes necessary for you to create your own vehicle that you can sell your product in terms of the existing banks to targeting special industries such as agric and manufacturing as the Minister of Finance has indicated in the budget. That means it’s not going to duplicate what the existing banks are already doing theirs will be different” he noted.