Prof Peter Quartey
The Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana has backed government’s intention to establish a national bank purposely to support investment in the agriculture and manufacturing sectors.
Professor Peter Quartey, a senior economist for ISSER, said the move has the potential of boosting the country’s Gross Domestic Product (GDP).
He made the comment on the sidelines of the Institute’s press conference on the 2018 budget in Accra.
He said that the new bank should operate strictly and solely for the agriculture and manufacturing sectors by providing soft loans to agribusinesses because the current interest rate hovering around 30 percent per annum offered by commercial banks is too high.
The establishment of the new bank is crucial because the Agriculture Development Bank (adb) and the National Investment Bank (NIB), which are supposed to support agribusinesses have shifted their focus from the agriculture sector and rather engaging in universal banking, he noted.
“There is the need for a new bank solely for agriculture and manufacturing, which has the potential to create more jobs, or otherwise the government will have to reform adb and NIB,” he emphasised.
He noted that given government’s desire to boost investments in the agricultural sector, the roles of adb and NIB should be revised to perform their core mandates well.
According to ISSER, it has become necessary because the two banks had neglected their core responsibilities of providing banking services and investments to agriculture-based ventures.
Dr Charles Godfred Ackah, Head of Economics Division, ISSER, in a presentation on ISSER’s stand on some government initiatives in the 2018 budget, said government’s failure to make agriculture attractive is due to the lack of investment from the private institutions.
He said the current market interest rates are high and make it difficult to invest profitably in agricultural sector.
He noted that addressing the incentive structure in the sector to promote private investments would prove more sustainable than programmes that essentially give hand-outs like fertilizers, seedlings and other farm inputs to farmers.
Dr Ackah noted that government’s inability to attract private investment into the agricultural sector was largely due to the rain-fed nature of the sector.
He added that the slow pace of government to address the climate vulnerability issue was worrying and therefore called for aggressive technological approach in the sector.
Commenting on the 2018 budget, Dr Ackah said government intends to create jobs for the teeming unemployed youth, enhance the agriculture sector through investments in agriculture and agribusiness, industrialise through value addition, stablize macroeconomic environment and create equal opportunities for inclusive growth.
The 2018 budget indicated that the agriculture sector expanded by 1.3 percent points in 2017, adding that in the 2016 financial year, it increased from 3 percent to 4.8 percent.