Banks should take on more risks – ADB boss

Dr. Jon Kofi Mensah, CEO of ADB

With increased capital, banks should take on more strategic risks by booking more loans and supporting local businesses to grow, Dr. Kofi Mensah – Managing Director of Agricultural Development Bank (ADB), has said.

“I am expecting incremental funding into the private sector, and the Ghanaian banks are more welcoming when it comes to injecting capital into the private sector – and I am calling on all banks to join.

“We need to be able to absorb more risk and manage the risk. The higher your capital, the more loans you can create. You just make sure there is a risk management mechanism that will ensure shareholders also get their value,” he told the B&FT at the company’s recent press soiree that came off in Accra.

After the injection of capital from the Ghana Amalgamated Trust (GAT) into four banks, a total of 22 banks – excepting the National Investment Bank (NIB) – have now met the central bank’s GH¢400million stated capital requirement. This move, according to Dr. Mensah, is a recipe for economic growth due to the expected increase of funding into local enterprises.

He explained that the ADB is poised to lead the growth of local businesses after restructuring its agribusiness department. The department is now a full division, headed by General Manager who is part of the Executive Committee.

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The agribusiness division, he noted, has been expanded into two main departments, namely agric services and agric value chain, and so far 36 agric desks have been set up across branches and more are in the offing – with units also being set up under the agribusiness for specific government initiatives such as the One District, One Factory (1D1F) and Ghana Rubber Estates Limited (GREL) projects.

“The transition period is over, and so you will be seeing the positive effects of all the structures put in place. Between 2018 and 2019, we have invested more than GH¢100million in Planting for Food and Jobs.

“Allied to this programme, we have heavily funded the Buffer Stock Company; because if productivity increases and purchases are not assured, we are bound to have a downturn. So, with Buffer Stock there is a balance between productivity and guaranteeing farmers’ price and markets,” he said. He noted that the main reason for restructuring is to grow the bank’s agric loan portfolio by 50 percent of total loans by 2022.

The future

Dr. Mensah noted that the bank’s future will be guided by its five-year strategic plan, which embodies financial growth, increased market share, human capital development, prudent information and risk management, and market development.

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