ADB will surely go

As gov’t makes case for increased agricultural financing, but to whom?

The dailyEXPRESS has learnt that key members of government are openly disposed to the sale of the Central Bank’s shares in the Agricultural Development Bank. But their reasons are nothing but in the national interest and geared towards ensuring a sustained financing for agriculture.

Confirming the position of the pro-sell it group in government, Government spokesperson on finance & economy Kwaku Kwarteng told the dailyEXPRESS that the motivation “is more because of the hunger for credit in the agricultural sector” than anything else.

Quizzed on government’s intentions as captured in the 2007 budget statement, Kwaku Kwarteng admitted the administration’s desire to encourage increased private sector participation in the banks in furtherance of a policy to improve the capitalization of the banks.

“It’s not just about ADB alone but strengthening the entire financial sector by inviting other partners to make the capital base of government and private owned banks much more stronger to meet the needs of the country whether by groups or individuals” he explained.

The government spokesperson argued that contrary to all the counter arguments, “the overall credit to the agriculture sector in 2006 was only 4.8% of total credit to the private sector.”

“…Stan, that was a drop from the 6.2% that went into agriculture financing in 2005 and we are talking about total credit from all the banks, not just ADB, and what that tells me is that there is an even more urgent need to do something about agric credit” he added.

Mr. Kwarteng explained that while government gave an indication of its intention to improve the capitalization of the banks it has not as yet indicated that it is selling its shares in any of the banks.

Stanbic, he re-emphasized, made an unsolicited bid for shares in ADB, with two others also expressing interest.

He noted that the current debate and discussion of the merit in selling off shares in ADB should be based on the expanding the capital base of the banks, which are currently in no position to support the economic growth rates the country needs especially in the agric sector.

Mr. Kwarteng argued that as proponents of allowing increased private sector participation in existing banks to improve their capital base, government as majority shareholder in ADB, National Investment Bank and Ghana Commercial Bank “must be seen to be taking the lead in making bank’s become more competitive.”

Reacting to the sustained expression of disapproval against the sale of shares in ADB, the government spokesperson advised the ‘protagonists’ to rather focus on the plight of farmers, the level of financing for agriculture and the readiness of the banks to provide farmers with credit and not the staff of ADB.

Mr. Kwarteng also observed that it is a much better option for government to bring in readily available private sector participation in ADB than to borrow money to re-capitalize ADB arguing that the borrowed money could be used in the development of other sectors of the economy.

The objective of the ADB according to the government’s spokesperson is to make credit readily and easily available for farmers to access but that is not happening.

He reiterated that while some individuals in government are in favour of the BoG shares in ADB been disposed off, government as a collective has not taken a decision yet.