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Opinion | Mar 16, 2019

Ghana’s Financial/banking Crisis:

A Dead End To The Nation’s Next Gneration Of Financial Services Entrepreneurs?
Ghana’s Financial/banking Crisis:

Ghana is preparing to meet the International Monetary Fund come March 20th, 2019. According to the Finance Minister, Mr. Ken Ofori Atta, Ghana is unclear as to how to deal with Microfinance as well as Savings and Loans Companies. The way forward is simple. Leave them alone or develop a distinct policy directives for the tiers under the non-bank financial institutions. They are all unique with peculiar needs and aspirations.

Ghana should also be bold to tell the IMF that ensuring sustainable financial inclusion and making domestic capital financing a reality in Ghana will require a free flow of a new breed of young capital entrepreneurs. Ghana needs new Jimoh Ibrahim’s, Ken Ofori Atta’s, Ken Thompsons et al.

Amidst this same uncertainty ahead of the meeting which may likely breed a likely ‘Ghanaian ingenuity’ to include further descending the cleansing aisle, will not only be treacherous to the financially marginalised but also a threat to entry and the emergence of new, young and vibrant entrepreneurs in the financial services sector.

Under no circumstances should the misdeeds of the old be a hindrance to the young. Many have ambitions to build enterprises in the financial services space. After all it takes one generation to destroy and another to build no matter the price to be paid.

Like any field of enterprise, business and the economy, capital entrepreneurship is critical and can only be sustained in an intergenerational approach. Unfortunately, it is the most overlooked area of enterprise development among the youth.

To borrow the words of Mike Nyinaku, which for me are still relevant, ‘‘my generation has started doing things not because we are smarter but because these seniors dared first and flattened the barriers.’’ He goes further to say, ‘‘over the last decade a lot has happened to entrepreneurship in financial services in Ghana. Banks have emerged out of the blue- obviously inspired by the extent to which the Nigerian invasion coupled with that Togolese aggression disrupted our market.’’

Most remarkably Mr Nyinaku asserts, ‘‘I believe that ten years from today- if nation building is to be sustained – those ahead of BEIGE should move into international boundaries, BEIGE should cover the nation, Direct Savings and their colleagues should be market leaders so that another opportunity can be created for new a entrant.’’ This was at the launch of The Beige Bank. Obviously speaking to Mr Kofi Amoabeng’s beginning which according to him started with a desk and a chair in his room.

Today we all know the size of Ghana’s infrastructure deficit and the value on it. Interestingly we are not doing anything to give a chance for the emergence of disruptive financing ideas. Compelling the chase after FDIs and external funding. Ten years into commercial oil and gas activities our financial services sector lacks the capacity to provide the needed coverage and capital investment. It took Exxon months to find a local partner.

Dr Strive Masiyiwa says in Africa, you don’t assign your project deadlines. Aside the porous nature of the continent’s political economy, bribery and corruption, project financing is a major challenge. His Liquid Telecom and the ambitious cable network project is not spared. Much the same as Alhaji Aliko Dangote’s audacious refinery project.

To Vice President Alhaji Dr. Bawumia, there should be an account for every Ghanaian. But this desire and calling is at the back of breaking the very system that should inspire confidence and build a thrift culture. The Coordinated Program of Action gives a new direction for financial inclusion which of course can’t be achieved by mere rhetoric’s and economic projections and stricter regulatory regime.

At every point in the cycle of an economy the system is disrupted and should be supported to thrive. That is why Yunus Muhammad’s Grameen Bank and Grameen Foundation remain a resilient model and it will take this generation to build on that.

Of course, Ghana’s financial/banking crisis will remain with us for a while. Perhaps we are even yet to encounter the vilest. It has taken almost a decade for Iceland, a tiny Nordic country with an estimated population of 337780 to recover from its banking crisis although they managed to return to growth in 2011. Two years after. Let me say that Ghana’s is yet to return to growth.

The underlying causes of the banking crisis are the same for the two countries. What I do not know is whether Ghana will share in the courage of Iceland that saw 29 bankers jailed as at 2016 or they will merely join their American counterparts to only administer austerity measures and continue to siphon state funds which will eventually end up in the pockets of cronies as with the liquidity supports. Here I speak of GAT. While thousands of young Ghanaians continue to beam with ideas yet lacking the financial backing.

Well, it is also important to note that there is a forgotten generation in this whole debacle. Ghana has forgotten the next generation of capital entrepreneurs (financial enterprises builders; the new crop to mobilise and inject capital with strict adherence to good corporate governance practices). They were denied a space to participate and we are also denying them a space in the recovery. I belong to this generation should you care.

Experts and technocrats say we do not need many banks. What they forget is that Iceland had only three privately owned banks and that caused its financial crisis. They also fail to establish as to whether we do not need a hybrid financial services sector with respective regulatory regimes.

It is obvious the distress of non-bank financial institutions is due to the banking crisis. We were in this country when commercial and universal banks entered the microfinance space and engaged in ‘Susu’ activities. Suddenly they found the informal sector attractive and we watched them openly to operate in a space that should be reserved for the operators of the informal sector. What were we thinking as a nation?

Bernard Kwofie
Bernard Kwofie, © 2019

This author has authored 69 publications on Modern Ghana.
Author column: BernardKwofie

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