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16.09.2004 Feature Article

Banking in Ghana: A Risky And Costly Proposition

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What is it about banks? Wherever you go in the world today, it is a given that the banking sector has rather poor reputations. In Australia, as in many Western countries, banks are criticised for putting profits above social conscience. So you get the situation where banks close unprofitable branches (usually in regional and rural areas) and/or increase account-keeping fees. These combine to deny the most vulnerable in society access to banking facilities and services.

Despite these criticisms, it is a fact that only very small proportions of people in Western societies are outside of the banking system. Cash transactions in Western economies are, for the most part, reduced to a bare minimum. People have less need to cart large wads of cash around because there are several options for financial transactions including cheques, credit cards, Internet banking, phone banking, point of sale electronic transactions and numerous others. Wages and salaries in both the public and private sectors are usually paid through the banks. In fact, you would struggle to function normally in any of these societies if you do not have a bank account.

Contrast that with Ghana and the situation is vastly different. Of course, one can argue that Ghana is not yet at the level of Western societies and therefore cannot be expected to have similar levels of banking services. Ghana, like many other Third World nations, has a large proportion of illiterates and the economy is to a large extent cash-based. To that extent, it is unrealistic to expect the same level of banking savvy, as you would find in a typical European country. However, revelations that only 5 per cent of Ghanaians own a bank account (Shocking revelation: Only 5% of Ghanaians have bank account - Ghanaian Chronicle Monday, August 30, 2004) are quite disturbing.

There are many different reasons for the rather low patronage of banking services but I would dwell on a few including questionable business practices and customer service and archaic approach to services by banking institutions in Ghana. I have to stress that poor business practice and customer service are not the preserve of the banking sector. In other words, you could substitute any number of organisations and the outcomes would be the same.

You call This Customer Service? Have you ever visited a bank in Ghana recently? When in Ghana, the last place you are likely to find me is inside a bank. If you have been in a bank, no one needs to remind you of the deplorable attitude of tellers and bank managers who seem to consider customers a necessary nuisance they have to endure in between their personal business. Well, in Ghana, all power resides in the bank manager who in turn 'rules' the bank like his or her own fiefdom.

In 2002, my wife had the unpleasant duty of going to close her late mother's account at a bank. With proper documentation, this should not take you more than 15 minutes in any bank. It took three visits to the bank to accomplish this simple task. On the first occasion, she was told the account could not be closed without the manager's approval so she was booked in to see the manager a few days later. On the second trip, the manager was so busy the meeting had to be postponed for another day.

On the third visit, my wife and the executor of my late in-law's will, had to wait for more than an hour outside the manager's office. Finally they were ushered in to see 'he who must be obeyed'. Not only did my wife have to sign umpteen papers, this little 'ceremony' was interrupted numerous times so the manager could attend to 'urgent' phone calls, which often turned out to be social calls. On one occasion, the manager actually talked about upcoming social engagements.

Having finally finished signing all the papers, my wife was then informed that it would take another week everything to be finalised. In other words, if she needed the money at that time, bad luck! Now, I consider opening or closing an account a very simple task which can and should be done by bank tellers. Putting such 'minor' functions in the hands of managers is ineffective and breeds corruption.

The point here is this: if it takes so much time just to open or close an account, why would anyone bother particularly for those people who may only be dealing in a few thousand cedis, which would be the bulk of the Ghanaian population. It is worth the effort to have an account in Ghana?

Give Up 19th Century Mentality If even one were to ignore the terrible customer service in the Ghanaian banking sector, there is one other issue that is impossible to ignore and that is what I call the 'hassle of third world banking'. It's a fact of life that many people in Ghana today live at least one tro-tro journey from their local bank branch. What this means in effect is everytime they desire to brace the unfriendly faces of the tellers they have to endure the pain and cost of a tro-tro or bus ride for the pleasure of being treated like pains in the proverbial…

Now, living away from a local branch is not of itself a purely third-world phenomenon. What makes it so is the fact that usually there are other branches of the same bank close by; however you cannot just pop in and transact business. You need to go to the very branch where your account is held. For example, if you happen to have an account at the Circle branch of the Ghana Commercial Bank, and you live in Dansoman, you cannot pop into the Kaneshie Branch of the same bank and ask to withdraw money.

It is simply an alien concept because for the most part, banking is yet to be computerised and, as such, branches do not 'talk' to one another. So if you face situation where your meeting with the manager is cancelled or postponed as in my wife's case, you have to bear the extra cost of transportation. The lack of computers should not really be an excuse it is possible to provide customers with Personal Identification Numbers (PINs) or codes so that if a customer showed up in a different branch to withdraw money, all the bank would do is get the customer to speak on the phone to the actual branch which would then verify personal details and the PIN and if all checks out, authorise the other branch to provide the money. Other solutions may be preferred.

Anyone who remits money to relatives in Ghana through the banks is aware that although the money is wired immediately from the bank of origin to the headquarters of the destination bank in Ghana, it takes up to two weeks for the local branch, and the recipient, to receive the money.

Band Aid Solutions, Anyone? Instead of addressing such basic issues some banks seem to be more interested in promoting products for their small business clientele rather than promoting products that would help expand their customer base. Ghana Commercial Bank, for example, has introduced net banking targeted at its business customers. I am not against net banking; in fact, it is my preferred method of banking but you have to question why a bank would choose to emphasise this approach when majority of the population may not directly benefit from it.

I reckon the money would be better spent introducing new products that would help reduce the need for people to carry so much cash and be open to attacks. You would have thought that they would put considerable efforts into getting the fundamentals right and broadening the customer base by putting in place policies that are attractive to people who would rather keep monies under their pillows than entrust their hard earned cash to smirking bank officials who cannot see beyond their plush office surroundings. Would it not have been a better idea to seek to bring small traders and numerous artisans around the country who handle large sums of money into the banking fold?

In such an environment, you would only want to get into banking out of necessity. These glaring problems are across the entire Ghanaian banking sector.

A Boon To Armed Robbery Armed robbery is thriving in the Ghanaian society because it is all too easy to identify people who have withdrawn large sums of money from the bank. It doesn't take a degree in rocket science to determine what is in the garbage bags people bring out of banks. Even if you don't spot the ever-present bags, the way people look nervously around once they step out of banks would arouse anyone's suspicion. Armed robbers are feeding off the fact that people have become sitting ducks with their tell-tale sacks of money. It is not uncommon for robbers to tail bank customers and hold them up. My sister and a friend were held up in 2002 when the friend had to withdraw money to pay for an airline ticket. A doctor friend at 37 Military Hospital was also shot in December 2002 after he had withdrawn large sums of money from the bank for a similar purpose.

To understand just how serious the bank-related armed robbery situation has become, consider a recent GNA report posted on Ghanaweb (Police caution public on bank robbery attacks, Ghanaweb 10-09-04). This report indicated that the Ghana Police Service has advised bank customers who wish to withdraw large sums of money to “contact the nearest District Police Commanders for any assistance”. That's right. Let the police know you are about to swim in wads of cash and they will stop all they are mandated to do and give you your own personal escort to and from the bank. Of course, there is the small matter of paying the police 'drink money' and exposing yourself to the possibility that the person you may be talking to is an informant for the armed robbers you are trying to avoid.

How did we get to this situation? The banking sector has failed miserably to wean the public off its ridiculous addiction to cash transactions; that's why! The banks need to provide cash alternatives for payment of large sums of money. Why, for instance should anyone have to withdraw millions of cedis just so they can purchase an airline ticket? Why can't a system be devised so moneys can be transferred from a person's account into the airline or travel agent's account and reduce the need for anyone to carry cash for such routine transactions? Both incidents narrated above, and I'm sure countless others, could have been avoided if non-cash alternatives had been promoted for financial transactions.

The Cost of Stupidity It is anyone's guess how much of our hard-earned foreign exchange is 'wasted' each year to replace notes that have been defaced beyond recognition. Why is the Ghanaian cedi so easily defaced? The answer is very simple; it comes from the wear and tear of too much handling and poor practices such as women tying up the currency in their clothes and being 'mashed' to fit in brassieres. To date, our banking sector has been unable to devise means to help market women and everyone reduce the need to handle so much cash on their persons. If for nothing at all, promoting non-cash alternatives would reduce the need to reprint our fragile currency. Alfred Opoku Canberra, Australia Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Alfred Opoku
Alfred Opoku, © 2004

The author has 7 publications published on Modern Ghana. Column Page: AlfredOpoku

Disclaimer: "The views/contents expressed in this article are the sole responsibility of the author(s) and do not neccessarily reflect those of Modern Ghana. Modern Ghana will not be responsible or liable for any inaccurate or incorrect statements contained in this article."

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