Speaking to the Economist: Should We Smile with ADB/NIB Merger?

The subject of creating a national development bank from the merger of Agriculture Development Bank (ADB) and National Investment Bank (NIB) continues to be a matter of debate.  ghanatalksbusiness.com had a chat with Mr. Kwame Ofori Asomaning, CEO of Goldcoast Financial Holdings on the proposal.

www.ghanatalksbusiness.com: What is your take on the proposed merger of ADB & NIB to create a national development bank?

KOA: Every business decision has an objective.  I want us to look at the objective of this merger.  Is the objective to create a large national bank to be able to handle big ticket transactions? Is it to get those two national banks to fulfill the purpose for their establishment?  I think it is a good idea to have a big national bank that can handle big ticket transactions but we already have Ghana Commercial Bank.  If the objective of the merger is to get these two banks to focus on agriculture and infrastructural developments, it is a good idea because these developments are long overdue.  My issue however is that these banks have been long expected to carry out this mandate which is evident even in their names.

Why have they not be able to work as they should?  I would put the cause to three factors; Bad Policies, Government Politics and Favouritism.  Now to my biggest question.  Would merging these banks solve the very problems that have plagued them as separate entities?  Probably not.  We may only compound the problems when the banks are merged. This may only be graduating the setbacks into a higher and grandiose scale whose negative outcomes would be a drain on the nation’s resources and with more dire consequences to the national agric and infrastructural development future.  In the face of wobbly policies, unfavourable government business interventions and favouritism, I doubt if this proposed merged establishment, though with very good underlying intention, would be able to function as expected.  Again, this is not just to discount the merger or just to be a Prophet of Doom.  The call here is for leaders to take a critical look of the objective(s) and whether the proposed action of a merger would actually help to achieve the objective(s).  I definitely agree with having a bank that has the capacity to do big things and that is focused on accomplishing such specific and relevant mandates as agric and infrastructure development, which remain backbones to the economy but are currently bleeding badly.  This is basically to align merger objectives with the everyday government actions.  If there are any signs of factors that would mitigate the success potentials of the merger then they should hold on.

In setting up a bank that is this big, functional and equipped to fulfil the nation’s agric and infrastructure vision, the problems identified should be dealt with.  The fact of meddling in the banks’ business with government’s politics should be averted.  Government should be bold enough to begin to tackle this menace.

The policies that govern and regulate the industries should be critically reviewed to make room for progressive thinking for such businesses.  It would be more preferred for these nagging factors to be dealt with before embarking on the merger. There are other factors like the capitalization of the banks in 2018 and all else that have to form the foundation for such critical considerations for merging ADB and NIB to form the development bank.

Watch Out for more on Speaking to the Economist.

Must Read This too; Why Government Should NOT Merge ADB & NIB

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