• He argues that Parliament has already passed the Development Finance Institution Bill 2020 which authenticates establishment of the DBG
• The DBG is however expected to provide lending support to critical growth sectors
Dr. Mark Assibey-Yeboah, a former Chairman of the Finance Committee of the 7th Parliament, has indicated that government can move ahead to establish the Development Bank Ghana without seeking parliamentary approval.
He explained this is a result of Parliament passing the Development Finance Institution Bill into law in 2020, which accords government the chance to set up the DBG.
Reacting to calls made by the Minority in Parliament, indicating they will oppose the formation of the bank, the former Finance Chair of the House described the Minority’s stance as a flawed one.
“Parliament passed the Development Finance Institution Bill into law in 2020. It is that law that underpins the establishment of this bank. There won’t be any need to go back to Parliament,” he pointed.
Meanwhile, the Minority Leader in Parliament Haruna Iddrisu speaking with journalists on Friday, September 3, 2021, argued that the establishment of similar banks like the DBG had to be given parliamentary approval.
He cited the establishment of the Agricultural Development Bank back in 1965 as an example of a development bank that had to first seek parliamentary approval to set up.
Haruna Iddrisu further added that owing to the challenges plagued by the banking sector over the period, it is only necessary for Parliament to regulate the objectives of the DBG in order for it not to veer off its fiscal mandate.
Meanwhile, a former Vice-Chancellor of the University of Ghana-Legon, Prof. Ernest Aryeetey, has cautioned against political and civil interference in the establishment and operations of the National Development Bank.
According to him, the bank must run autonomously to serve its intended purpose of lending to critical growth sectors of the economy.
Prof. Aryeetey said lessons must be learnt from previously established banks that failed as a result of poor corporate governance structures and political interference.
“If Parliament wants to control the Development Bank, it will fail. If civil servants want to control the bank, it will fail. If individual businesses want to control the bank, it will fail. We need to craft a governance system that takes into account all the above interests and still remain independent,” Prof. Aryeetey earlier said.
Despite backing the idea of establishing a National Development Bank, the former UG Vice-Chancellor pointed it will survive if it adopts stringent corporate governance structures and runs independently but wants a broader conversation on organizational arrangements to address risks associated with long-term financing in Ghana.
The move to set up the Development Bank Ghana was first announced in Parliament by the Finance Minister, Ken Ofori-Atta in 2019.
Most recently in May this year, Ghana secured recently secured a €170million facility from the European Investment Bank for the establishment of the Development Bank of Ghana (DBG).
The DBG is expected to help address two important constraints in the country’s financial system: namely, lack of long-term funding, and the lack of adequate funding to productive sectors of the economy.
The banks’ primary focus areas will be agribusiness, with a focus on off-farm value-chain activities, manufacturing, ICT, software; and allied services including Business-Process Outsourcing, tourism, and boosting home ownership through affordable and longer tenure mortgage finance.
Dr Mark Assibey-Yeboah is a former Chairman of the Finance Committee of the 7th Parliament