SADA calls for National Development Bank

Charles Abugre, Chief Executive Officer (CEO) of the Savannah Accelerated Development Authority (SADA), says accessing large-scale affordable financing for private and public sectors to drive development poses one of the biggest challenges to the Northern Savannah Ecological Zone (NSEZ).

Speaking to journalists at a recent roundtable held in Accra, he said conventionally such range of investments should be financed through National or Regional Development banks (NDBs), which could provide ‘patient capital’ and respond to developmental imperatives.

“However, in recent years, while many NDBs are alive and well, the role of national development banking has been relatively overshadowed by the policy shift proposed to many countries to rely more on private sector and commercial finance even though that has left a gap in terms of ensuring long-term finance for investment.”

He added that it has become increasingly evident that ‘patient capital’ is a crucial ingredient for attracting private capital because of its potential impact in lowering risks.

“Currently, the zone, along with the rest of Ghana, is faced with high cost of domestic credit. Access to external credit comes with its own challenges in the light of the weak cedi. Further, with fiscal consolidation efforts underway to tackle Ghana’s weakened macroeconomic fundamentals, the financing gap for the zone’s infrastructure and public service investments will likely widen.”

He said SADA was set to establish a bank by the end of next year with a seed capital of $100 million. About 24.6 percent of Ghanaians in the Northern Savannah Ecological Zone live below the national poverty line.

The poverty incidence map 2005/2006 states that Wa West District is the poorest with 92.4 percent of its residents living below the national poverty line.

This means 92.4 percent of the population live on less than $1.90 a day at 2011 international prices. The most economically active community in the area – Tamale North sub-metro has 24.7 percent living in poverty.

SADA, therefore, proposed a 20 percent government and 80 percent private equity for the bank.

Some major funding partners include the World Bank, African Development Bank, ECOWAS Bank for Investment and Development, the International Fund for Agriculture and Development, among others. According to Mr Abugre, the peculiar challenges of the north call for a financial body with a long-term agenda to help transform its fortunes.

NSEZ has over 11 million hectors of land suitable for commercial agriculture. The zone represents about 54 percent of the country’s total land mass.