ADB must help revive the agric sector – Nana Otuo

The Agricultural Development Bank (ADB) must go back to its core mandate of massively financing the agricultural sector in the country, the Chief Host of the Ghana Banking Awards, Nana Otuo Acheampong, has advised.

According to him, the sector is in dire need of financial support to turn around its declining fortunes while creating more job opportunities for the youth.

Nana Otuo Acheampong made the call in an interview with the Graphic Business in Accra when he was asked about his views on the appointment of a new Managing Director of the bank, Mr Daniel Asiedu.

“It is true that the sector is risky and many of the banks have completely shied away from it but we must note that in banking, where there is greater risk, there is always greater returns when things are managed properly and tactically”, he said.

Consequently, he asked the bank to devise pragmatic ways to ensure that they identified the right sources within the sector and provide the needed funds.

Sector performance

The 2016 budget statement states, all sub-sectors in the agriculture sector, apart from the crops subsector, are expected to record positive growth rates in 2015, led by the livestock and fishing sub-sectors.

It stated that “Agriculture, however, is expected to register a growth of 0.04 per cent, a decline from the revised target of 3.6 per cent recorded.”

It said the crops subsector, in spite of being the only subsector that is expected to record a negative growth, would be the source of this decline on account of the sub-sector’s large weight.  

Agriculture is one sector that has received less attention from governments over the years, although it is touted as the one single sector that employs the largest number of people in the country.

Its potential is huge, particularly at a time when other parts of the world are looking to Africa to feed the world because of its large arable lands suitable for crop cultivation and animal rearing.

At a forum in Accra last week, the Chief Executive Officer of Dalex Finance, Mr Ken Thompson, stressed the need for the government to focus on the sector to revive its fortunes.

According to him, Ghana has a comparative advantage in that sector and urged urgent action to get the sector back on its feet.

New MD challenged

In spite of the challenges, Nana Otuo Acheampong urged the new MD of ADB to devise that strategies that would enable the bank to increase its exposure to the ailing sector.

“He has to take that seriously and work towards it because it is necessary for the economy and the growth of the bank,”he said.

ADB shaky

In the middle of last year, the bank went through a myriad of challenges in relation to a number of decisions taken by the previous Managing Director, Mr Stephen Kpordzih.

These included the sale of the ADB House for what the staff of the bank described as a pittance and the renting of a new head office building at an exorbitant cost to the bank.

The bank was also faced issues regarding a large amount of loan defaults, a phenomenon the staff alleged was a deliberate attempt by some board members and their cronies to run down the bank only to acquire it when it was eventually floated on the local bourse.

The mother union of the bank’s workers union took a number of actions, including strikes actions and petitions to the President, as they fought to protect the collective interests of their members..

These among many other things forced the bank to twice postpone its intended Initial Public Offer (IPO) to raise funds to expand its operations.

IPO success

The bank has since the last quarter of last year made a public offer consisting of the sale of 74,888,369 existing ADB Shares, an offer for subscription of 75,471,698 new ADB shares at the offer price, and the primary listing of all the 155,451,524 existing ADB shares and 75,471,698 new shares on the Ghana Stock Exchange.

The bank is undertaking this offer and subsequent listing on the GSE to raise additional capital to support its expansion plans and have the flexibility to finance future expansion and growth.

ADB fortunes

The bank’s fortunes have been dwindling for the past few years mainly as a result of generic challenges arising from lack of investments.

Its net profit declined by 40 per cent in 2014, dropping from GH¢80.63 million in 2013 to GH¢47.87 million.

The decline was mainly as a result of a substantial growth in interest income, a challenge Mr Asiedu will be expected to address.