Vice President, Mahamudu Bawumia, has touted the launch of a new specialised bank, the Construction Bank, as a significant chapter in Ghana’s banking industry.
Delivering a keynote address on Wednesday at the unveiling of the bank in Accra, Dr Bawumia urged the Board of Directors and shareholders of the new bank to pick up critical lessons from the defunct state-owned Bank for Housing and Construction.
Read: AGI lauds plans to revamp Bank for Housing and Construction
The Construction Bank is a wholly Ghanaian-owned company that will provide banking services in project finance, commercial and consumer banking with specialisation in construction, infrastructure and mortgage financing.
The launch of the new bank brings to 34 the number of major banks currently operating in the country.
The Vice President has promised that, because most of the infrastructural projects will be initiated by state agencies, the government will ensure prompt payment for completed projects undertaken by investors on behalf of the government.
“What we have done is that in the context of the Public Financial Management Act, we are going to implement very strictly the GIFMIS [Ghana Integrated Financial Management Information System] system to make sure [state agencies] are only awarding contracts if there is money to pay for those contracts. This is quite a departure from how things have been done previously,” he said.
He adds that, as part of government’s efforts to support the banking sector, three key projects will be undertaken by the end of the year to formalise the economy: a National ID system, a national digital addressing system and a robust interoperable payment system.
He notes, for instance, that an interoperable payment system will provide a seamless payment platform between the telcos, banks and other players.
“We will do our part as government, and we will in return hold you to your promises the same way as you hold us to ours and together can create partnerships that will see this country work once again,” he told managers of the new bank.
First Deputy Governor the Bank of Ghana, Millison Narh, said the Construction Bank is special to the central bank because it is breaking into the banking sector at a time when the construction industry, which has been bedevilled with a lack of financial support, is resiliently leading the country’s infrastructural development.
The First Deputy Governor said he considers the initiative to set up a specialised bank to support the construction sector of the economy as a laudable venture with the potential to addressing the financing gap.
“The opening of this bank in my view is in recognition of the growing importance of the construction sector of the economy,” he said.
Mr Narh said although the demand for low-cost housing remains very strong, so is the competition within the banking sector, and hence urged managers of the bank to be innovative in order to remain vibrant.
The contribution of Industry, of which Construction is a subsector contributed some 5.7% to GDP in 2012, and in 2014 the share increased to 12.7%.
Available data also suggest that growth in Industry, however, declined slightly by 1.4% to 11.3% in 2016 with the growth rate in the Construction subsector declining by 3.5% over the same period.
“Considering the critical role of the Construction sector in supporting infrastructural development, there is a need to initiate action towards reversing the trend in the industrial sector of the economy,” he urged.
He said the country has a huge housing deficit that requires proportionate financing response from the financial sector and hence urged the new bank to step up efforts at making gains in the housing industry.
The Construction Bank’s Board Chair, Asare Akuffo, said the bank appreciates that the quality of infrastructure of a country is one of the key indicators in the measurement of development and called for a concerted and integrated effort by all stakeholders to ensure that the right facilities are in place to propel Ghana’s overall development.
The bank’s vision is to become the bank of choice for construction and infrastructure development financing through innovation, technology, quality customer care and affordability.
“The driving force behind our vision is anchored on our values of open-mindedness, boldness and visionary leadership. These are principles that will inform our decisions and how we collaborate with our clients to contribute our quota to Ghana’s changing development landscape.
“There is a wind blowing across the length and breadth of this nation to grow businesses and we are poised to be a reliable partner in that endeavour,” he said.
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