The Chief Executive Officer of Progeny Ventures, and Executive Chairman of Global Access, Dr. Kofi Amoah, has called for a public policy that mandates commercial banks to commit a specific percentage of their lending to ailing sectors of the economy.
“The cause for deregulating and liberating finance so that it seeks out the most immediately profitable investments is not strong in the early stages of economic development.
Money must be made to serve the objectives of national development policies, that is, maximising agricultural outputs, and in investing and supporting manufacturing to produce and export.”
According to him, the policy, when pursued, will ensure adequate capital is allocated to sectors that have over time been neglected, so they can grow and contribute significantly to economic growth.
Dr. Amoah indicated that allowing banks to channel their resources to only a few sectors that they consider highly profitable is not the best way to go for a developing country like Ghana which needs to embrace industrialisation to drive the economy.
“In Ghana our banks have been making good profits every year. However, herein lies the problem when in an emerging economy like Ghana’s where banks become very profitable but industry remains non-existent or remains at best technologically backward and cannot expand to create jobs for even the graduates we have invested huge sums to nurture, not to mention the generality of the population.”
He therefore proposed that the financial system be kept on a short leash, targeted for a considerable period of time and made to serve industrial policy.
“This logic, and the precise financial policy it entails, has been one of the anchors of the development successes of almost all rich nations at the initial stages of their development, he said.
Dr. Amoah made these recommendations as he delivered the keynote speech at a public lecture organised by the Regent University College of Science and Technology last week in commemoration of the school’s 10th anniversary.
Speaking on the theme: “Industrialisation of Ghana: The Way Forward,” Dr. Amoah outlined a three-legged development plan focusing on agriculture, manufacturing and finance, calling on the country to adopt same to ensure a strong domestic economy.
In 2011, the industrial sector, compared to the other two sectors of agriculture and services, was the largest contributor to the country’s Gross Domestic Product (GDP), with 54.4 percent.
However, latest figures from the Ghana Statistical Service (GSS) show that the once vibrant sector recorded a negative growth of -5 percent rate in the second quarter of 2016.
On agriculture, Dr. Amoah proposed that the country maximises agricultural output by “putting idle labour to work on idle land” to increase food for domestic consumption and also to save the money used in importing food to produce more and export more.
This, he said, will build the base for a strong domestic economy while engaging the global economy through export of manufactured products from subsidised home-grown agro-based factories.
“Indeed, it is the close alignment of finance with agricultural and industrial policy objectives that has facilitated the unprecedentedly rapid economic development of north-east Asia (Japan, Korea, Taiwan, China). In Ghana, the finance policy of government must recognise the need to support small, high-yield farms in order to maximize aggregate farm output,” he urged.
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