The Finance Minister’s efforts to establish the Development Bank Ghana (DBG) is facing stiff opposition from the Minority parliamentarians who have vowed to ensure the Minister sets up the bank using a route familiar to them.
Minority Leader, Haruna Iddrisu, has said Ken Ofori-Atta’s strategy of bypassing an Act of Parliament in establishing the DBG is “defeatistâ€.
“It is kind of defeatist for me for the Ministry of Finance to want to establish this bank without recourse to Parliament. But will they come to Parliament to provide funding for it? What will be the basis for Parliament approving money for such a bank? Already it means the GHS300 million allocation [seed capital for the bank] is clearly illegal,†Mr Iddrisu told the media at a press conference on Thursday, September 2, 2021.
Nana Akufo-Addo-led administration, through the Finance Ministry, has been working towards setting up the DBG to address the market failures in the Ghanaian credit markets.
DBG is expected to increase the availability of medium to long-term financing to Ghanaian businesses and to facilitate economic transformation and job creation.
The primary focus areas of the Bank will be Agribusiness – with a focus on off-farm value-chain activities – Manufacturing, ICT, software, and allied services, including Business-Process Outsourcing, and Tourism and Homeownership Mortgage Finance.
Earlier this year, the Finance Ministry obtained a loan of €170m (GHS1.2bn) from the European Investment Bank to finance the national bank.
The bank has the backing of the German government and is expected to tackle the lack of long-term financing for industry and agriculture. Currently, only 15% of all bank loans are for five years or longer, a situation experts say stifles investment in long-term projects.
The Minority’s contention with the initiative is that the Finance Minister is choosing to set up the bank like a private institution.
A Deputy Finance Minister, John Kumah, has denied suggestions that the Finance Minister was breaking the law with the route has chosen to set up the bank.
“What is going on is not illegal and it is not contrary to our laws. The Ministry of Finance is going through the existing banking regime to set up the development bank,†he stated on Thursday in reaction to the Minority’s press conference.
He also said it was wrong to say the Finance Ministry has not informed Parliament about the setting up of the bank, clarifying that there was a difference between informing Parliament about the initiative and setting up the bank through an Act of Parliament.
“In the 2021 budget…it was stated that a seed fund of about 300 million cedis was made available. Every time the Finance Minister has been to Parliament, he has informed Parliament about steps that are being taken to set up this Development Bank of Ghana. So, if anybody says we have not been to Parliament it is not true. It is a question of route. Are you seeking to set it up by an Act of Parliament, as in by legislation? That is different from not going to Parliament,†John Kumah explained further during a radio interview.
This disagreement over the appropriate route that must be used to set up the bank threatens the implementation of the new development bank. However, the minority believes that there needs to be parliamentary legislation in place before the bank is set up as pertains to other development banks in the country.
While the Finance Ministry is arguing that setting up the DBG without an Act of Parliament frees it from Executive control in determining the Board of Directors, the Minority on the other hand believes all the development banks in the country were set up by an Act of Parliament.
“We will not accept any public resources dedicated to that bank until it is supported by legislation. We in the minority are opposed to even the concept of a new national development bank,†Mr Iddrisu said.