BoG and MiDA sign Agreement

Accra, Sept. 13, GNA - The Bank of Ghana (BoG) and the Millennium Development Authority (MiDA), the body charged with the responsibility to manage Ghana's Millennium Challenge Account Compact, on Thursday signed an Implementing Entity Agreement (IEA) to operationalize the Agricultural Credit and Financial Services Activities. The agreement is the essential first step to allow accredited participating financial institutions, such as commercial banks, saving and loans companies, rural and community banks and financial non-governmental organizations, to begin disbursing credit. Under the agreement MiDA will spend about 82.4 million dollars made up of 58.4 million dollars on the agricultural credit activity and 24 million dollars for the Financial Service Activity and 24 million dollars for the Financial Service Activity.

The agricultural credit facility comprises 40.7 million dollars of the Agricultural Credit Programme and 17.7 million dollars to build the capacity of the participating financial institutions. The Agricultural Credit Programme, which is part of the 547 million dollar compact, is to be funded through a 40.7 million dollars revolving on-lending facility to support the production of high-value horticultural, marketing, transportation, processing, post-harvest storage, staple food crops and related value-chain activities in 23 designated districts.

The Financial Services Activity, which is in two parts, aims to improve the National Payments System by providing a grant for the Cheque Codeline Clearing System and the Automated Clearing House System at BoG. It also involves the computerisation and automation of all rural banks in the country, funding review of the National Payments System Laws and sponsorship of a three-year nationwide public awareness campaign on the use of payments systems available through the banking sector.

Mr. Martin Esson-Benjamin, Chief Executive Officer of MiDA, said arrangements had been made to train participating financial institutions to deliver credit to the targeted beneficiaries. These capacity-building measures include training bank staffs in agricultural credit and providing grant funding for the construction of loan offices in the designated districts and a grant of 60 per cent of agricultural capacity programme to capitalize rural banks in particular. Dr. Paul Acquah, Governor of Bank of Ghana, said he was happy about the signing of the agreement, saying it had set the stage for the project to take off. He welcomed MiDA technical support to the financial sector in order to accelerate the transformation of the National Payments System. Dr. Acquah said the Bank had embarked on a comprehensive payment system that would entail the use of a biometric smart card to enhance financial inclusion to all citizens in the country. He challenged the participating financial institutions to do thorough analysis in disbursing the funds to ensure sustainability. Government of Ghana and the Government of the United States signed the Millennium Challenge Compact on August 1, 2006 to accelerate the reduction of poverty through economic growth led by agricultural transformation in 23 districts. 13 Sept. 07

NECO 07 Economics Demonstration ADB Workers march against sale of ADB

Accra, Sept. 13, GNA - Workers on Thursday staged a demonstration against the proposed sale of the Central Bank's 48 per cent share in the Agricultural Development Bank, as pressure mounted on the government to abandon the proposal. Scores of members of the Tema District Council of Labour (TDCL) of the Trades Union Congress (TUC) started the demonstration at Tema and ended in Accra. The demonstrators, accompanied by brass band music, presented a petition protesting against the proposed sale of the shares to Nana Akomea, Minister of Manpower, Youth and Employment. The Chairman of the TDCL, Mr Wilson Agana said previous sales of state enterprises such as Ghana Airways had not yielded any dividends and ADB must not be allowed to suffer the same fate. A number of Banks, including Stanbic Bank, have expressed the desire to buy the shares, but this has been met by the wave of protests from the workers of the Bank, civil society, TUC and political parties. Mr. Agana said it was important that workers' concerns and interests were taken into consideration, adding that the march was therefore in support of the resistance by the TUC against government's intention to sell the shares and mobilize public support among workers and farmers.

Nana Akomea told the demonstrators that he had been asked by President John Agyekum Kufuor to receive the petition and he would hand it over to Cabinet, which was meeting on Thursday. He said he wanted to dialogue and had therefore called a meeting with the TUC next week to discuss the issues. The TDCL has dismissed arguments that ADB needed a total amount of 250 million dollars instead of its current 66 million dollars to operate effectively.

"It is important to point out that this argument is flawed because it is not possible for any financial institution in the world to always have the ability to raise the needed capital required for a specific project," the TDCL said.

"We cannot simply for the purpose of improving efficiency, assume that ADB should be sold to a private foreign strategic interest." Last month TDCL gave government a two-week ultimatum to rescind its intended decision to sell the 48 percent shares of ADB, or members would take to the streets.

Mr. Joseph Henry Mensah, former Senior Minister who supports the sale of the Central Bank's shares, has said what is at stake in the debate of off-loading the shares of the Bank of Ghana ADB is not a simple "sale" but a "reorganisation" of the Bank so that it would have more strength to serve the interests of the farming community and the operators of small and medium-scale industry throughout Ghana. He said whatever the achievements of the ADB in the past 50 years, it was manifest that today, with a net worth of just US$66 million, that it was in no position to cater adequately for the urgent need to modernize and re-equip Ghanaian agriculture.

"That need for agricultural transformation was the sole purpose for establishing the ADB with state resources. "And indeed, most of those resources were being contributed by these same farmers and self-employed entrepreneurs: so it was also a matter of equity to extend to them the benefits of the nation's financial system."