The Convention People's Party (CPP) has described the move by the government to sell its shares in the Agricultural Development Bank (ADB) as suicidal for the economy of the country.
It has, therefore, called on the government to stop all moves, including the review of proposals by interested investors, to sell the shares because it is the only agricultural bank that lends a substantial amount of credit to the agricultural sector, which was the backbone of the economy.
A leading member of the CPP and a former economist with the World Bank, Dr Kwaku Osafo, who made the call, said over the years, the lending rates of other banks to the agricultural sector had reduced drastically to seven per cent, making ADB one of the major saviours of the sector.
Recently, there were rumours that the government had sold its shares in the bank to Stanbic Bank, but a Deputy Minister of Finance and Economic Planning, Professor George Gyan-Baffour, denied the claim.
The government owns 52 per cent shares in the ADB and the Bank of Ghana owns the remaining 48 per cent.
A statement signed by the deputy minister reiterated that no such decision had been taken, neither had the government or the Bank of Ghana sold its shares in ADB to Stanbic Bank. The statement explained, however, that the government received an unsolicited proposal from the Stanbic Bank sometime last year.
"A committee made up of officials of the ministry and the Bank of Ghana was formed to review the proposal and suggest an appropriate response," it said and added that the committee was yet to submit any report to the government.
"Again we wish to state that although the 2007 budget statement and economic policy stated the government's intention to rationalise her participation in the banking industry, this rationalisation would be done taking cognisance of the role these banks play in the Ghanaian economy," it added.
According to Dr Osafo the fears of the CPP stemmed from the fact that the government had established a committee to review the proposal and suggest an appropriate response, which gave an indication that there was the possibility that the bank would be sold.
He said the proponents of the establishment of the bank took into consideration the important role the agricultural sector played in the economy and explained that in 1996 the ADB lent out 54 per cent of its portfolio of about ¢100 billion to the agricultural sector and although the percentage reduced to 25 in 2006, it amounted ¢1.8 trillion.
He explained that presently the total assets of the ADB was ¢ 4.2 trillion, while Stanbic Bank's assets in Ghana was about ¢ 400 billion, “so how can a small bank of this nature, which is about 10 times smaller, be allowed to take over ADB”, he questioned.
Dr Osafo said apart from the role that the ADB played in the agricultural sector, it was also a major mover in the Western Union Money transfer.
“Last year alone it processed over $400 million into the country's economy through some of its linkages in rural areas, ” he said, and explained that if the government's shares were sold to Stanbic Bank, the money transfer sector, which was a major revenue earner for the ADB, would be lost to the government.
He said there was no guarantee that the significant role that the ADB was playing in the rural areas as well as the purchase of agricultural inputs for both crop and fish farming would all be maintained by the Stanbic Bank.
Dr Osafo said the numerous Presidential Special Initiatives (PSIs) which were also being supported by the ADB would be gone.
He expressed the view that the figures being bandied around as the cost of the shares that the government wanted to sell ranged between $ 80 million and $120 million yet the assets base of the ADB hovered around $500 million, and therefore, it did not make economic sense to make such a sale.
He again argued that the ADB had shares in Ghana International Bank in London and that if the government sold its shares in ADB those assets would automatically go to Stanbic.
Dr Osafo suggested that in the unlikely event that the government turned deaf ears to the many appeals and advice not to sell its shares, then it could offload 12 per cent of its 52 per cent shares in the bank and add this to that of the Bank of Ghana to make it 60 and float it on the Ghana Stock Exchange.
He explained that the 60 per cent of the shares could be traded on the stock exchange based on the special institutional arrangements, so that rural banks in Ghana could have 10 per cent, staff and management of ADB 10 per cent, 20 per cent for other banking institutions, and the remaining 10 per to Ghanaians.
He said the sale of government's shares in the ADB brought to the fore the issue of ownership, because government, representing the people of Ghana must ensure that it had substantial shares in such strategic assets in order to protect the interest of the people, because expatriate businesses always had profit as their main motive.
Dr Osafo wondered why the government would want to sell its shares in the ADB which yielded a dividend of ¢32 billion in 2006 while the much touted shares in AngloGold Ashanti, which is a huge conglomerate, brought in ¢57 billion.
He also suggested that if the sale of its shares would go on it must pass through parliament because the bank was established by Act 286 of 1965 and also through the procurement process to ensure transparency.
Story By Donald Ato Dapatem