Bright Simons’ recent article on DBG uncovers issues that could derail the bank’s mission to support Ghana’s small and medium businesses. Here’s a breakdown of the top takeaways:
- Mission vs. Reality
DBG was set up to offer affordable loans to Ghana’s private sector, especially SMEs. However, many businesses are still getting loans at regular market rates, which defeats the purpose of a development bank intended to make borrowing cheaper. - Following a Troubled Path
Simons points out that DBG could repeat the mistakes of earlier development banks like the National Investment Bank (NIB) and Agricultural Development Bank (ADB). Both banks struggled due to poor governance, and DBG risks a similar fate if things don’t change. - Accountability Concerns
Despite being publicly funded, DBG is registered as a “private limited” company, which lets it bypass some public procurement rules. This setup makes it harder to hold DBG accountable for how it spends public money. - Heavy Spending on Consultants and Tech
DBG’s biggest expenses are consulting and tech services, taking up over 60% of its total budget. A lot of this money went to companies with little known background, raising questions about how wisely these funds are being spent. - Internal Conflicts and Resignations
The internal audit team at DBG has been clashing with management over spending issues, and this friction led to the resignation of two independent directors. This turmoil raises concerns about the bank’s internal controls and governance. - Inflated Contracts
Simons mentions several cases of over-budget contracts, like the $17 million deal with a Mauritius-based company, Kulana, for software licensing, which was nearly 60% above budget. These cost overruns have attracted the attention of DBG’s internal auditors. - Reliance on International Funds
DBG’s operations are heavily supported by loans and grants from the World Bank, European Investment Bank, and the German bank KfW. Misuse of these funds could hurt Ghana’s ability to attract future international support. - Lack of Due Diligence
DBG has been called out for failing to thoroughly check the background of some contractors. In one case, a consultancy was paid in advance but didn’t deliver as promised, highlighting the bank’s weak oversight on who it partners with. - Internal Auditors Raise Red Flags
While DBG’s external auditors, KPMG, reportedly missed these issues, the internal auditors flagged problems with accounting and contract management. Their findings suggest that DBG’s internal controls aren’t working as they should. - Need for More Oversight
Simons stresses the importance of regular public updates and civil society involvement to ensure DBG stays true to its mission. Transparency on loan rates, distributions, and contract spending would go a long way in keeping DBG on track and avoiding past mistakes.
In short, Simons’ article shows that DBG needs stronger oversight and reforms to stay focused on its goal of helping Ghana’s businesses. Without fixing these issues, the bank may end up like previous development banks that failed to make a real impact.
