The government must take advantage of development finance to raise capital to address the development needs of the country, an Associate Professor of Finance at the University of Ghana Business School (UGBS), Prof. Vera Fiador, has said.
“At this point, what we need is development finance because we have got a lot of structural challenges we need to address, some which many not necessarily yield profitability but would form the bedrock upon which we can ride on to the point of profitability,” she said in an interview with journalists on the sidelines of the Development Bank Ghana (DBG) UGBS Development Finance Dialogue Series held at Legon on Tuesday.
The programme organised by the DBG, a development finance institution established by the government to raise capital to support the private sector, on Tuesday at Legon in partnership with the UGBS, was on the theme “Deepening Development Finance Knowledge, Innovation and Impact.”
The maiden thought-leadership programme seeks to enhance the understanding of development finance and the role it plays to deliver development impact and how research can influence the mandate of the DBG.
Prof.Fiador, the first Associate Professor of Finance of UGBS, said harnessing development finance adequately would help the country to develop its capital market for the benefit of the economy.
“If we can harness development finance adequately then we will get to the point where we will be able to develop the various markets that will speak to both the public sector needs for welfare and private sector needs in terms of profitability,” she said.
She said structural issues such as investor protection, shareholder rights and governance remained ‘outstanding” and thus the players in the private capital market in the country find the local market a “bit too risky.”
Prof. Fiador defined development finance as the coming together of government and the community to provide funding for development projects and share the associated risk and thus
shield the private sector of such risk, adding that development finance straddled between public and private finance and has both profit and welfare considerations.
Prof. Fiador stressed the need for development finance to come from internal sources, stressing that when development finance came from within it helped to develop the local market and the economy.
“Mobilising development finance from within, I think it is going to make us a richer nation in the long run as opposed to
waiting for handouts that come, usually with conditionalities, that sometimes work against the ultimate goal of trying to develop the economy,” Prof Fiador stated.
The Associate Professor of Finance called for more research to be conducted on development finance, saying “The development challenges facing Ghana requires that we undertake rigorous research to provide evidence-based policy based recommendations that are underpinned by fresh thinking and not recommendations based on dogmatic implementation of research conducted in other jurisdictions especially in the western or developed economies.”
“If we are to deepen our knowledge in development finance, there is the need for academia and industry to collaborate intensely so we can produce high quality research that informs innovative and pragmatic polity recommendations to support our quest for growth and development,” she stressed.
BY KINGSLEY ASARE
