The Development Bank of Ghana (DBG), when established, should forge a closer collaboration with the Agricultural Development Bank (ADB) to drive the agricultural sector.

The Asantehene, Otumfuo Osei Tutu II, who called for this, said the establishment of the development bank should be aimed at giving banks, such as the ADB, enough funds to grow the agricultural sector of the economy.

Otumfuo Osei Tutu made the call when the Board of Directors of the ADB and its management paid a courtesy call on him at the Manhyia Palace last Friday.

“I will be a key advocate for institutions such as the DBG and the African Development Bank to give loans to banks such as the ADB to enable it to give more loans to all within the agribusiness value chain,” he said.

According to him, agriculture remained the backbone of the Ghanaian economy, for which reason it must be given all the needed support.

The Asantehene commended the board and the management of the ADB for helping to make the bank profitable again and also refocusing on its core mandate of agricultural financing.

He urged the management to continue to support the agricultural sector to grow and create more jobs for the teeming unemployed youth.

Investment

Briefing the Asantehene, the Board Chairman of the ADB, Mr Alex Bernasko, said since taking over, the new board had been trying to reposition the ADB as one of the profitable banks in the country.

According to him, when the new board took over in 2017, the bank had made a loss of close GH¢70 million, but with prudent management and measures put in place, “things are taking positive trends”.

Last year, he said, the bank announced a GH¢500 million support for the broiler value chain as part of its contribution to reduce the importation of poultry products into the country and boost local production and consumption of poultry within the next five years.

Apart from that, Mr Bernasko said, the bank had also been a major partner of key government projects, such as Planting for Food and Jobs and the One District, One Factory (1D1F), which, he indicated, were all agricultural focused.

Customer appreciation

In a related development, the ADB has hosted its customers in the Ashanti Region to a cocktail to interact with them.

The occasion was also used to show appreciation to the customers and learn at firsthand some of their concerns and also court their support for the bank.

Addressing the customers, the Managing Director of the ADB, Dr John Kofi Mensah, said very soon, the bank would reduce its interest rates.

He said it would also review some of its charges to give a reprieve to businesses and encourage patronage of its services.

In response to calls by some of the customers for the expansion of the operations of the bank in the region, Dr Mensah said plans were far advanced for the opening of two more branches to add to the existing branches in the region and also expand its operations in the region.

He expressed the bank’s appreciation to the customers for remaining loyal to the ADB and doing business with it and urged them to continue to remain faithful as the bank improved on its services to make their businesses easier.

As part of improving services in the region, he said, the ADB would also mount more automated teller machines (ATMs) at vantage points to reduce turnaround time and distances to access ATMs in the region.

Earlier in his welcome address, Mr Bernasko had expressed the board’s gratitude to the customers for helping the ADB to become profitable again.

He intimated that with the support of the customers, the bank should be able to hit GH¢150 million this year and appealed to them to be ambassadors of the bank and bring more customers to it.

Background

Last May, the Minister of Finance, Mr Ken Ofori-Atta, announced that the government would launch the DBG in July 2021, with seed capital of about $500 million.

The bank is seen as Ghana's best bet to addressing the issue of lack of long-term and competitively priced credit which has faced the private sector for years.

He said the setting up of the bank was a key pillar in the government's efforts to quickly recover from the effects of the COVID-19 pandemic and resume the economic transformation path, as articulated in the Ghana CARES/Obaatanpa Programme.

Nearly $250 million of the initial capital will come from the government as equity financing, while the remainder will be sourced from the World Bank Group (WBG) to operationalise an initiative that has taken almost five years to put together.

Mr Ofori-Atta said the government was determined to capitalise the bank to the tune of $1 billion over the next five years, within which it would also be encouraged to leverage the capital and other assets to attract additional resources to finance businesses.

The DBG is intended to be a model institution that supports the financial system to play its role of supporting the private sector to expand and create jobs.

The DBG

The DBG is not similar to the existing commercial banks in the country.

It is a non-deposit taking wholesale bank and will neither give retail nor direct business loans, as the erstwhile Bank for Housing and Construction, NIB, ADB, and the others did.

It will rather provide funds for the existing commercial banks and other qualifying financial institutions for them to provide long-term lending and other innovative products that are presently lacking in the system.

Primary focus areas of the DBG will be:

• Agribusiness, with a focus on off-farm value-chain activities

• Manufacturing, ICT, software and allied services, including business-process outsourcing, and tourism

• Boosting homeownership through affordable and longer tenure mortgage financing