Banking on the Future

Ghana ended last year with tighter monetary policies than in 1998, despite the economic difficulties arising from the drop in commodity prices. These are policies that the central bank, the Bank of Ghana, is determined to maintain.

"We will continue to keep tight monetary policies to make sure the gains we have made are not eroded and to ensure that the new Government coming in next year will inherit a strong economy," says Kwabena Duffour, the Bank's Governor.

The success of these policies was due, in no small measure, to the improved coordination the bank has developed with the Ministry of Finance and, no doubt, to the influence of the International Monetary Fund.

"There has been an understanding between the Government and us that it does not serve anybody's purpose to spend what you do not have," says Mr Duffour. "So, the Government has not been doing that. It has been very careful."

Comprehensive reforms to the banking system have brought an end to the practice whereby the Government banked with the commercial sector.

The result was that the banks were lending the Government its own money at rates of 40 per cent or more.
Now the Government's accounts are lodged with the Bank of Ghana and the country's 11 commercial banks are seeking other sources of business.

Customer-oriented services, multi-purpose smart cards and promotional techniques, such as mobile banks, are being introduced, apparently with some success.

As a result the Ghana Commercial Bank (GCB), to name one - the heavyweight among the local banks - has reported an increase in pre-tax profits of 131 per cent on last year. Its operating income shot up from 129 billion cedi (£20.5 million) to 219 billion cedi - enough to bring a smile to the faces of shareholders and reassurance to depositors. William Bray,

the GCB's managing director, has slowly but surely been restructuring and reforming the operations of the bank, which has 135 branches throughout the country. An ambitious computerisation programme is under way - 14 branches are now linked by a network and a further 65 have stand alone systems. There are plans to integrate all the network's branches by the end of this year.

Alongside the technological developments, the bank has been engineering a change in customer service orientation among staff, although a major element of the restructuring process is still to come. This will entail closing 20 to 25 branches and shedding at least 1,000 of its 3,500 staff.

"Ghana is overbanked in the cities," says Mr Bray. "If we were to stretch out to the rural areas it would make a lot of difference."

He argues that the banks content to make the most of the rich business in the capital, Accra, and other cities such as Tema, Takoradi and Cape Coast should be compelled to open at least some branches in country areas.

Efforts are being made to encourage the setting up of community-based rural banks that will be more economically viable in remote areas which at present have no banks.

"We are trying to set up an Apex Bank that will serve as a central bank for all the rural banks," says Mr Duffour. This project is being supported by the World Bank and the International Fund for Agriculture and Development.

Another aspect of the restructuring is the development of a corporate sector. The GCB is now seeking customers among the nation's manufacturers, exporters, traders and farmers.

As part of the reform process, the Securities Regulatory Commission ensures the orderly development of the securities industry and the Bank of Ghana has been given increased examination and supervision functions.

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