Tackling Ghana’s Soaring Food Inflation: Why Refocusing Operations of ADB, DBG EXIM Bank Matters—-It is emerging that Ghana‘s fight against persistent high food inflation cannot be won without reinventing the operations of state banks such as the Agricultural Development Bank (ADB), the Development Bank Ghana (DBG), and the Ghana Export & Import Bank (GEXIM).
Financial Analyst and Banking Consultant, Dr. Richmond Atuahene says part of the solution to the menace of food inflation lies in a radical shift in the way some state banks operate.
Dr. Atuahene argues that the cost of credit to farmers is very key to the fight against inflation and hence these state banks must be refocused and positioned to provide affordable credit to farmers. He therefore makes the following proposals;
Agricultural Development Bank Must Go Back to the Basis
In his view, he finds it very disturbing that the Agricultural Development Bank will virtually “abandon” agricultural development and be engaged in universal banking like any other bank. He strongly recommends that the business operations of ADB must be reengineered to focus just on agricultural financing and its supply and value-chain development.
“The Government must change the business model and orientation of ADB from its universal banking to original agriculture financing. The government must ensure that ADB redesigns it business model to refocus on the agricultural sector and its supply chain value with cheaper loans and other credit facilities to support the sector,” he told Brand Focus Africa.
Retail Banking Should be the Core Operations of the Development Bank Ghana
The wholesale banking of DBG, Dr. Atuahene explains is quite inimical to the fight against food inflation. He is therefore pushing for a paradigm shift from the current wholesale to a retail bank. He explains that the current operations where DBG lends to financial institutions for onward lending to other businesses are not agriculture-friendly.
He says the best alternative is for DBG to provide retail financing for key agricultural commodities like rice, maize, tomatoes, onions, shea butter, and poultry. These food items, he says are very essential to food security.
“The Development Bank Ghana must change its current business model of wholesale banking into Retail Development Bank with a specific focus on developing Rice, Maize, Tomatoes, Onion, Shea Butter and Poultry Products,” he proposed.
Ghana EXIM Bank Must Prioritize Agriculture
The banking consultant is also calling for a major repositioning of Ghana EXIM Bank to make agriculture its main focus. While EXIM Bank currently supports exports and industrialization, he believes it should invest heavily in the agricultural sector, which remains the backbone of Ghana’s economy.
Supporting farmers with financing for the production, processing, and export of agricultural goods would drive down food inflation while strengthening the country’s economy.
“The Ghana EXIM Bank must reposition and refocus on the agricultural sector which main stay of the Ghanaian economy,” he maintained.
The latest Food Security update by the World Bank published this month revealed that Ghana tops the charts as the country with the highest food inflation among lower-middle-income nations in Africa.
With this sad and ironic situation, Dr. Atuahene insists that financial institutions must become enablers of agricultural growth, not barriers. He urges policymakers to take decisive action, restructure these banks, and make affordable agricultural financing a reality.
