Professor Peter Quartey, director of the Institute for Statistical, Social and Economic Research (ISSER), said the National Development Bank (NDG) will complement and strengthen the operations of existing financial institutions.
He said the Development Bank will provide more funds, technical support and training, among others, to help economic growth.
Professor Quartey was speaking at a development dialogue organized by ISSER on the theme: “National Development Banks and Sustainable Finance in Ghana” in Accra.
ISSER chief speaking on “Synergies between the New National Development Bank”, said NDB will deepen financial intermediation, which will propel industry growth, NDB activities and yields.
He said NDB, by applying the wholesale model (EximBank, Agricultural Development Bank (ADB), National Investment Bank (NIB), Fintech), could serve more end customers and cover more sites without incurring high operating costs.
He said the wholesale model proposed by the NDB would foster the growth of private financial intermediaries who become the arms of the NDB, thus reaching underserved sectors and clients.
“The private financial institution that mediates NDB funds will partially absorb some of the NDB’s credit risk,” he said.
However, Professor Quartey said interest rates for end customers may be higher because private financial institutions have passed on their cost of financial intermediation as well as any other margins.
He said the NDB would not provide commercial loans or direct commercial loans to economic actors, but through the NIB, AfDB and Eximbank.
He said development banks, when functioning, would fill the gap in appointing directors to companies, deploying in-house expertise, underwriting and issuing equity, and playing a countercyclical role, supporting corporate levels. global investment and protecting the productive structure of the economy.
The ISSER chief said the Bank would serve as a source of investment funds for the country’s commercial banks and provide advanced medium and long-term financing instruments for specific sectors of the economy, focusing on ’emphasis on agriculture and industrial sectors.
It would also enhance the growth and expansion of many companies by injecting additional capital into the agricultural and industrial sectors through their respective designated banks.
He said the NDB should improve the country’s trade balance by generating more exports and encouraging import substitution, encouraging innovative technologies and improving management skills within the private sector through training.
Professor Quartey said that NDB would certainly provide long-term financing to economic actors and stimulate growth and work closely with Exim Bank, ADB and NIB with mutual benefits for these actors.
He said that with regard to synergies, there would be the intermediation of funds from NDB to end users, absorption of credit risks, provision of equity, technical support, vocational training and financial deepening, financial sector growth and NDB growth.
He said the success of the Development Bank would depend on employing competent managers, operated like a business and free from undue political interference.
“We should strengthen regulation to avoid another cleanup of the financial sector (2000, 2017, 2034?),” He added.
Dr Vera Fiador, senior lecturer at the University Business School, speaking on successful approaches and future national development banks, said there should be a need to look at the market failures that need to be addressed and the best way to go about it.
She said, “We also need to question some of the tested methods that have actually worked for the success of some development banks. “