Prof. Ernest Aryeetey, Secretary-General of the African Research Universities Alliance and former Vice-Chancellor of the University of Ghana, has warned the government against establishing another development bank that would allow politicians and civil officials to have undue influence.
According to Professor Arteetey, a Development Economist, the failure of previously created Development banks may be attributed mainly to inadequate corporate governance structures.
As a result, he cautioned that the yet-to-be-established Development Bank Ghana should be genuinely autonomous.
The Ministry of Finance inked a €170 million deal with the European Investment Bank (EIB) to create a Development Bank in Ghana.
The bank is intended to be an independent wholesale financial institution with a limited emphasis on developmental projects, operating in collaboration with conventional commercial banks.
Prof. Aryeetey said during a Development Dialogue on National Development Bank and Sustainable Financing in Ghana hosted by the Institute of Statistical, Social, and Economic Research (ISSER) that the DBG should be structured 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 remains independent,” Prof. Aryeetey said.
He said that the only way for the bank to survive is for it to be independent and to implement rigorous corporate governance systems.
Prof. Aryeetey said that his enthusiasm for the new Development Bank stems from 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 desired that the discussion around the Development Bank focus on “organizational arrangements being put in place to address risks associated with long-term financing in Ghana.”
He also observed that, in contrast to other areas of the globe, nothing was mentioned about insurance for long-term finance.
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