Sampson Akligoh, Director of Financial Services at the Finance Ministry Head of the Financial Service Division at the Ministry of Finance, Sampson Akligoh has stated that a reset of erstwhile development financial institutions – Agricultural Development Bank (ADB) and National Investment Bank (NIB) – would’ve been ‘too costly’ -financially and socially – in the short-to-medium term.
This, coupled with systemic flaws from the previous model operation, he said, informed the decision for the new National Development Bank (NDB), with changes in the architecture baked into the legislative framework.
The status of both banks – formed to serve as development institutions – has been called into question, following their foray into universal banking, ostensibly as a result of weak financial performance. This was most recently highlighted during a validation session of a four-country study on the developmental activities and impact of NDBs conducted by the Private Sector Development division of the African Center for Economic Transformation (ACET).
The study, which examined NDBs in Ghana, La Côte d’Ivoire, Rwanda and Tunisia deemed both institutions not fit for purpose, owing to their negligible developmental projects, despite recent impressive financial performances, particularly of ADB. “Considering the contemporary structure of a development bank, it has been established that both ADB and NIB do not fit as National Development Banks,” the portion from the preliminary findings read.
Speaking as part of a panel at the validation workshop which had as its theme: The Political Economy of National Development Banks in Ghana – ADB, and NIB in Perspective, Mr. Akligoh affirmed the current status of both institutions, as described in the study and argued that the high social cost would have made a restructuring imprudent in the short-term.
“As we speak today, these institutions are not development banks, not only in terms of what they do but in terms of how they are licensed, registered, and their corporate strategy. Clearly, the whole conceptualisation of a DFI is lost on ADB and NIB, and we realised that we cannot even leverage it to create a new ecosystem.
The question is, can you reform them? The analysis that was done was very clear; it would be very costly. If it were only financial, it would’ve been easier to do but the social cost, especially legacy issues, of those reforms were going to be enormous.”
Adding that a corporate governance culture has developed, owing to the boards being appointed by the state, which would also have […]