The Deputy Managing Director of the Ghana Stock Exchange, Abena Amoah has endorsed the approach being used for the establishment of the Development Bank Ghana.
Madam Amoah, speaking as part of a development finance series at the research and consultancy Centre of the University of Professional Studies, noted that the Development Bank Ghana is set up to attract very cheap capital which should boost Ghana’s economic growth through agriculture and manufacturing.
Despite being described as the bedrock of Ghana’s economic development, the agriculture and manufacturing sectors receive just 4 and 8 percent respectively of investment.
The situation results from the lack of capital due to the short term nature of investment funding available.
In a bid to find a solution to the foregoing problem, the Government of Ghana in partnership with the European Investment Bank, and other international development institutions have committed to the establishment of a new development finance institution in Ghana to provide patient capital for Ghana’s industrialisation agenda.
This, however, will not be the first time government is establishing a development bank.
According to Dr Emmanuel Debrah, a finance Lecturer at UPSA, all development banks have collapsed due to poor corporate governance.
“When I heard of the Development Bank, what came to mind was all the development banks Nkrumah built. All of them are no more. The question is what have we learnt from there to guide the sustainability of the yet to be operational Development Bank, Ghana… Research has shown that all development banks in the past collapsed due to poor corporate governance,” Dr. Debrah noted.
Director of the financial sector division of the Ministry of Finance, Sampson Akligoh, speaking on the same platform, gave the assurance that the Government is plugging all loopholes to ensure the Development Bank Ghana stands the test of time.
“Typically, the way the bank was set up under the Companies Act gives us some level of immunity so in that case, we don’t have direct political involvement. Secondly, we have done all that we can to make sure that recruitment is done through an independent process,” Mr Aklogoh said, adding that the diversity of the partners working with the government to establish the bank is a testament to its sustainability.
Madam Abena Amoah who was on the same panel endorsed the government’s approach noting that “Development bank is structured to raise very cheap funds” which should “allow businesses to borrow into the target sectors”, i.e. manufacturing, housing, agriculture etc.
Speaking on why Ghanaian businesses prefer debts to equity in their quest for funding, Awura Abena Agyeman, CEO of Wear Ghana noted that young businesses are not just interested in money but also in what she calls smart Capital.