Development Bank of Ghana will not achieve its purpose – Finance expert predicts

Senior Lecturer of Management and Finance at the Appia-Menka University, Aaron Kumah has advised the government to reconsider its decision to use the €170 million facility acquired from the European Investment Bank to set up the Development Bank of Ghana.

He argues that if the government really wants to develop the country, it should rather focus on helping and training existing banks to support small and medium enterprises rather than investing in a Development Bank.

“I just wish the Development Bank idea is not accepted. To me, it is a bad idea. If we really want to develop the country by supporting small businesses, then we can coach banks in the country and direct them to support these businesses with loans without stress and at a minimal interest rate”, he said.

To him, if these existing banks are used to champion this cause, these business owners will not default on the loans.

Aaron fears the formation of the Development Bank of Ghana will only end up benefiting government cronies who in the end will run the bank down like several others before it.

Speaking to Samuel Eshun on the Happy Morning Show aired on e.TV Ghana and Happy98.9FM, Aaron said, “I am sure if the Development Bank of Ghana is set up, the government will place its people in there and it won’t achieve its purpose. Politicians will even send in their cronies to go for loans and end up not paying them back”.

He advised the government to go back to the drawing board and rethink the idea. “I understand development projects like 1D1F all exist but if we focus on the Development Bank idea, then the bank will only cause problems for us”.

The Ministry of Finance and the European Investment Bank have signed an agreement for the provision of a one hundred- and seventy-million-euro (€170 million) facility for the establishment of a new national bank, the Development Bank Ghana (DBG).

DBG is an integral feature of the GH¢100 billion Ghana Cares ‘Obaatampa’ Project, which is seeing the revitalisation of the Ghanaian economy following the onset of COVID-19.

This event took place on Wednesday, 19th May 2021, when the President of the Republic, Nana Addo Dankwa Akufo-Addo, held a meeting with the President of the European Investment Bank, Dr. Werner Hoyer, as part of his official visit to Belgium.

The €170 million facilities, according to Dr. Hoyer, is the largest facility provided by the European Investment Bank for the establishment of a development bank in Africa or for any other project, for that matter, on the continent.

Speaking at the signing ceremony, President Akufo-Addo noted that “the Development Bank Ghana is going to play a very important part in the rapid economic transformation of Ghana, following the onset of COVID-19.”