Bank of Ghana stirs dialogue on NIB’s new status

Governor of Ghana’s central bank, Dr Ernest Addison, is calling for a discussion and decision on the status of the National Investment Bank (NIB).

At a press briefing after reviewing the health of the economy, the Governor stoked the debate as to whether the bank should be given a universal banking license, retail or development banking license and whether state-owned or privately-owned banks should be the model to adopt.

“The whole model of development banking needs to be re-looked at if we want NIB to stay as a bank that is focused on industrialisation and development,” Dr Addison stated.

It’s been a long intervention on GCB, NIB and ADB Banks whether state banks should be the model or private banks should be the model, Dr Addison said.

“We all agree that empirically, state owned banks tend to carry more baggage because they try to meet several objectives; they are not only meeting commercial objectives, they are also trying to meet social objectives and therefore they tend to have bigger problems and the idea is that if we want the bank to be focused on certain objectives maybe giving it a universal license may not be the way to go; maybe making it a retail bank may not be the way to go.” he noted.

The Governor pointed out that the new types of development banks that are being designed are wholesale financial institutions that provide resources to be on-lent through more efficient financial institutions.

It will be recalled that the Finance Minister, Ken Ofori-Atta had in the 2018 budget confirmed that government was working to merge Agricultural Development Bank (ADB) and National Investment Bank (NIB) in the creation of a National Development Bank.

The Minister had said with the two banks government was looking at using them to finance its industrialisation and Agriculture agenda.

“The thinking process is clear that we need a strong and vibrant and well-capitalised enterprise development bank. This is to be able to support the Agriculture and industrialisation drive,” he said.

Government currently holds a significant stake in ADB and NIB, making it easier, to go ahead with this plan.

However, there are some of are of the view that there could be some challenges looking at the fact the government no longer has a controlling stake in ADB.

The finance minister had indicated that the state would raise, some 500 million dollars to help recapitalize the Development Bank.