Ghana's Central Bank is still working to clean up the banking industry. Among the most visible punishments, it has implemented is the required purchase of two private-owned banks, Capital Bank and UT Bank, by the state-owned Ghana Commercial Bank in 2017, with the approval of the Bank of Ghana. The Ghanaian Central Bank has taken out other activities, but the sector still requires stability. Ghana's banking system is now fragile, but its prospects look bright in the not-too-distant future if the Central Bank implements important laws and actions.
While the banking sector is still licking its wounds from last year's sanctions on two banks, another bank, Unibank, has been hit with direct central bank sanctions (It was adjudged the 6th best performing company in Ghana at the Ghana Club 100 awards in 2017). Currently, the country's Central Bank has required and permitted the management of Unibank (a privately owned bank) to be liquidated and taken over by KPMG as of March 20, 2017. Interestingly!
Now it's time for the Bank of Ghana to clean up its act. It's inexcusable to be in charge of a sector in which a player is ranked sixth best only to be accused of hiding crucial information. The Central Bank, on the other hand, has a case for the action against Unibank, claiming that the bank has consistently maintained a capital adequacy level ratio near zero, therefore implying that Unibank is bankrupt. According to reports, the Central Bank ordered Unibank to stop granting new loans to customers, but the bank disobeyed the order and continued to do so. Unibank was also ordered to refrain from incurring any extra capital expenditures, which they (Unibank) did not comply with, resulting in a violation of section 105 of Act 930.
If one looks at Unibank's banking activities over the years from afar, one can see that it has been a creative bank. As a result, the Central Bank and KPMG guide to the bank should not dissolve their positive employee-customer culture, which is easily seen to be "vibrating" among their customers and bank. Unibank has a huge number of devoted customers, many of whom are traders. As a result, the Bank of Ghana should lead Unibank, taking into account the bank's existing brand and identifying obvious ways to revitalize it.
However, the number of Universal banks in Ghana is far too high. The number should be limited, as having over 40 banks for a population of 26 million people is clearly excessive. Building the capacity of current banks to "branch out" to clients is what needs to be done. This can be accomplished in two ways: by increasing physical infrastructure to be closer to consumers, and by expanding digital infrastructure (Online/Mobile banking). Existing banks should focus on improving their customer service, getting closer to their customers, extending digital banking options, and enhancing banking security.
To be clear, I am not opposed to banks being registered; in fact, my attitude is the polar opposite, as I am well aware of the importance of financial services to individuals and the economy as a whole. My position will appear to be the polar opposite. Instead of registering new banks, my opinion is that current banks should be resourced to increase their capabilities rather than establishing new banks that operate a few branches with no superior services or infrastructures.
Finally, as the financial sector becomes more competitive in the coming years, some of these financial institutions will have to consider merging if they want to stay profitable and provide high-quality service to their customers, especially now that the Central Bank has increased the minimum capital requirement for banks to 400 million Ghana Cedis, which will take effect in December 2018.
myama100@gmail.com Mark Y. Tampuri Jnr, ChMC (Ph.D. Researcher, Jiangsu University)
The author is a Chartered Management Consultant and Ph.D. Researcher in Management Science & Engineering at Jiangsu University in China is an advocate for Youth and Gender issues as well as a researcher interested in Financial Inclusion and Development Finance, Public Policy & Local Governance, ICT & Digital Economy, Strategy, and Game Theory. Tamburri has extensive experience as a staff member of a development institution of governance and a broad understanding of management.
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