All is set for the new National Development Bank to take off in January 2020, Finance Minister, Ken Ofori Atta has hinted.
Ken Ofori Atta says all the necessary documentation for the establishment of the National Development Bank is worked on for the Bank to begin operations.
Background of the establishment of National Development Bank
During the 2019 budget presentation, Ken Ofori-Atta dislosed for the first time that government has made some progress in establishing the new development bank, which is expected to focus on industry and agriculture.
He added that “A technical committee appointed by the government has completed its work and has proposed that the institution should be set up as a completely new institution.
The Minister said, “Government has accepted the recommendations and has set-up a project team to operationalise the recommendations to launch the bank in 2019.”
According to sources, the government was initially considering to merge the National Investment Bank and the Agricultural Development Bank to create the new bank.
But, after a broad consultation, the Finance Minister said government is set to create an all new bank.
Structure of the National Development Bank
According to Mr Ofori-Atta, the bank would create a wholesale institution that would also help fund small businesses in the country in terms of raising long term funds, adding that establishment of this institution would help deal with dedicated capital for small businesses.
The Finance Minister disclosed that the new bank would be modelled on the lines of the National Development Bank of Germany – the KFW Bank.
Relevance of the new Bank to Ghana’s Financial Sector
However, some financial observers have advised the government to reconsider the decision to launch a Development bank next year.
According to them, the move will be a duplication since government already controls majority shares in some banks that have a focus on the intended reason for setting up the national development bank.
Reacting to the plan, Financial Analyst and CEO of Sam Bed Consult, Sam Bediako Asante was of the view that government must rather focus on equipping the already existing developments banks with mandates in the issues the national development bank will be addressing.
He observed that NIB and ADB have the ability to deliver on their targets if their activities are strengthened enforced.
“ADB is for agric and agribusiness purposes, and NIB for industrial purposes. We need to make sure they invest in those areas. We need to make sure they fulfill the purpose for which they were set up. We don’t need another development bank to do that” he spoke on Accra based radio station, Citi FM.
Nonetheless, the Bank of Ghana (BoG) has stated that it is not processing any application for a fresh banking licence to new entrants into the banking sector.
The Governor of the BoG, Dr Ernest Addison, who stated this, was content that the banking sector reforms that cut the number of banks from 33 to 23 had made the banking sector more resilient to shocks.