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Secretary-General of the African Research Universities Alliance and a former Vice-Chancellor of the University of Ghana, Prof. Ernest Aryeetey, has cautioned the government against the establishment of another development bank that lends itself to unnecessary influence from politicians and civil servants.
Professor Arteetey, a Development Economist, said the failure of previously established Development banks can largely be blamed on poor corporate governance structures .
He thus warned that the yet-to-be established Development Bank Ghana should truly be independent.
The Ministry of Finance signed an agreement with the European Investment Bank (EIB) for €170 million for the establishment of a Development Bank in Ghana.
The bank is expected to be an independent wholesale financial institution with a narrow focus on developmental investments, working through traditional commercial banks.
Speaking at a Development Dialogue organized by the Institute of Statistical, Social and Economic Research (ISSER) on National Development Bank and Sustainable Financing in Ghana, Prof. Aryeetey said the DBG ought to be set up differently.
“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 said.
He said the only way the bank could survive is to be independent and adopt stringent corporate governance structures.
Prof. Aryeetey noted that his optimism for the new Development Bank is borne out of the fact that “the bank is being presented as an effort to tackle many of the problems associated with development banks in the past”.
Prof. Aryeetey wanted the conversation around the Development bank to deepen around areas of “Organizational arrangements being put in place to take care of risks associated with long-term financing in Ghana”.
He noted that there was also little being said of insurance for long-term financing, unlike it is done in other parts of the world.