•Kwame Pianim has called for an efficient loan recovery mechanism for the operation of the Development Bank Ghana
•The DBG will operate as a non-deposit-taking institution but will rather offer loans to customers
•The Bank is expected to begin operations by the end of July 2021
Kwame Pianim, renowned investment analyst and economist, has called for a
Read full articlenumber of measures that are to be implemented in order to avert a collapse of the yet to be established Development Bank Ghana.
According to him, the bank which will operate as a non-deposit-taking institution but will rather offer loans, must ensure its loan recovery mechanisms are well in place to recoup monies borrowed to customers.
Making his submission at a dialogue series organised by Tesah Capital Investment last week, Kwame Pianism said the bank must heavily invest in an effective tracking system for its loans.
“Setting a development bank does not solve our problems. We’ve been there before. Because they [the previous banks] didn’t have a commercial banking wing, they weren’t keeping an eye to get their monies paid back when they give loans out,” he stated.
“So, the development bank that we are setting up is going to give their money to the banks. If this bank does not find a way or use the transmission mechanism, or getting monies to their customer and being able to collect the money from their customers, then we are in trouble,” Pianim advised.
Plans to establish the DBG commenced after Ghana secured a €170 million loan facility from the European Investment Bank back in May this year.
Finance Minister, Ken Ofori-Atta, interacting with journalists after the signing of the agreement explained the loan secured was to be paid in some 15 years.
He said the facility which backed by the World Bank and the German development bank KfW. comes with one of the lowest interest rates of 0.5 percent with a 5-year moratorium.
“This is a facility with one of the lowest interest rates of just half a zero percent with a maturity period of 15 to 20 years with a five years’ moratorium given to us. The essence of this is to ensure that institutions are able to borrow on their own credit history and balance sheet without further burden on the central government,” he said.
Meanwhile, President Nana Addo Dankwa Akufo-Addo on his part has also assured that the funds will be used for its intended purposes.
The president pointed that the bank, when operational, will satisfy the highest standards, scrutiny and best practices of Development Banks across the world.
The Development Bank Ghana will serve as a wholesale entity that will offer guarantee investment instruments in order to woo in universal banks to lend to critical growth sectors.
