Building a bank that can compete with the best in the world

President Akufo-Addo has promised to put Ghana back on track and has opened the door to business, focusing on private sector empowerment and aiming to make Ghana the most business friendly economy in Africa. In this context, how has GCB bank embraced the proposals of the new administration?

Last year was a very strange election period for various countries. And luckily enough, the New Patriotic Party managed to win the mandate of the Ghanaian people that clearly changes the dynamic of what Ghana’s economic and political fortunes are. The NPP is a very business-focused party that wants to build and develop the private sector within Ghana to be vigorous and to reach out to the world and especially the sub-region. Because of this, the NPP government is focused on prudent financial management. The NPP government is going to try to rein in the excesses of prior governments and highlight the potential of the private sector. It believes that it is the development and growth of the private sector which is going to be the driver of Ghana’s future and economy.

If you look back to the year 2000, when the NPP and John Agyekum Kufuor first won power, the statement that was made was that Ghana was open for business and that the golden age of Ghana business had begun. It is no different under Nana Dankwa Akufo-Addo. He is going to make sure that the gains that were achieved under the previous NPP government are quickly put back in place, ready for takeoff. In 2008, when the NPP handed over power to the NDC, everyone around the world looked at Ghana as the next growth story. This trickled down into the years 2010, 2011, but by 2012, it was clear that there was very new thinking about the direction of the country. So, we find ourselves where we are. That's not a problem. The NPP has done it once and it will do it again.

The Minister of Finance has announced different strategies and different incentives to the private sector to drive the economy forward and to encourage the private sector to do great things. There is clearly a problem, which will be dealt with; the cost of financing anything at all in this country is very high.  Therefore, we need to find a way of quickly reducing interest rates. They have already started to come down, and as they start coming down, the banks have to find ways to place their money rather than lend to the government, which means that the private sector once again become the obvious choice. That is what the government wants to achieve.

The new government is working on private sector empowerment as a key pillar to achieve sustained economic growth. How are you looking to support the private sector and how can the banking sector succeed in turning the struggling economy around?

In previous years because the government's borrowing rate was so high, the banks had absolutely no incentive to look at the private sector because it was risky. Banks would rather put capital in government bonds, which are safer, and offered a better return. The little finance institutions like savings and loans, the microfinance companies; their lending was about 48 percent, 50 percent a year for the private sector. Now that's not sustainable. You are setting up the private sector for failure because. The difference between an emerging market and the first world is that in the first world most creditors don't take all the money upfront; they are content to let it come in trickles. When you go to buy a TV, you don't pay for it upfront. You pay over a period of time. Most of the time in Ghana, if you're going to buy a TV they want you to pay upfront immediately, which locks up capital. What you need is money moving around in bits.

These are the things that the banks have to focus on; creating facilities for people to be able to pay over a period of time rather than paying immediately. The bank can only do that when they have certainty of interest rates. When you have a volatile situation, banks are very reluctant to engage with the private sector. So even now, even though government's interest rates are coming down, the banks are very slow to move because they've got a lot of money locked up in the government. It's going to take a while for that to turn around and feed into the private sector. But that's what's going to happen. I think every bank in the country has taken that on board and they are going to do something about that. The engagement with the private sector is going to be very different. Very soon, you’ll find things that happened in 2008 starting to happen again. Banks will be chasing customers to give them funds. We are gradually looking at that space.

There are currently 35 fully licensed and operational commercial banks in Ghana. The BoG is currently reviewing an increase in minimum capital requirements for commercial banks in the country. Can you share your thoughts on this? Is the market in need of consolidation?

In terms of consolidation, within the sector having many banks stimulates competition, but can they write meaningful business? That’s the question. I think that is a difficult question, for a lot of the banks. If you go to certain banks and you ask them to finance a shipload of sugar or rice, they may not be able to do it because their capital base is not that strong. There is the need for consolidation in writing these big-ticket deals. But I think that overall having a plethora of banks within the system doesn't make any difference. I happily sit on top and I smile. Long may that continue.

GCB Bank was founded in 1953, and has become Ghana’s largest indigenous financial institution with over 161 branches. Despite the challenges faced by the Ghanaian economy, GCB Bank has managed to remain profitable with profits after tax hitting 318M Cedis in 2016. What have been the key elements behind this outstanding performance?

I don't think I'm the best person to answer that, but I will say what I inherited. It was a wonderful group of people who are dedicated to the work that they do. A lot of our funds are in government bonds and that for me creates a problem.

I'm determined to write a different kind of balance sheet to create a nimble bank. As far as the profit-making is concerned, all my stakeholders will be pleased to know that we are focused firmly on the bottom line and we will continue trying to make a profit. But times have changed.

What did Ghana’s financial sector and your bank learn from the global financial crisis and what are you doing to ensure the development of a sound and transparent banking sector?

I'm fortunate enough to have spent 30 years in the United Kingdom. I was part of the Big Bang in 1986. I saw what happened: the deregulation of the financial system, which meant that all sorts of things could be done by various banks and a lot of self-regulation that took place.

Out of that self-regulation is what we see today, the abuse of the system. That is why conduct risk has become so important in the first world economies. Coming to Ghana, therefore, and coming to a bank such as this, my view is to focus on the best principles that I've learned in the first world and to try to embed some of those principles within this organisation. The culture and tone for this sort of thing needs to come from the top, so it's not something that I take lightly.

I want to build a bank which is not only universal in name but can compete with the best of the world. A bank that will be recognised by the best of the world as having the best practice, having a robust system of internal controls and adhering to all battles. I'm rapidly trying to ramp up towards that so that when I sit down with my various correspondent banks or any bank in the world they will recognise the fact that they are speaking to a bank capable of representing them on the African continent.

Ghana is still very dependent in various commodities like cocoa and gold. However the world commodity crisis is making governments look into diversifying their economies into other sectors. How is GCB bank supporting Ghana’s diversification and industrialisation?

The government of the NPP have said that they want to implement a “One District One Factory” initiative. That clearly means that we have to support our various agricultural sectors to add value to what is essentially a primary commodity exporting nation. We at the GCB Bank have placed 1bn Ghana cedis to the ODOF initiative. What we're saying is that those businesses which approach us need to be sustainable, bankable and self-sustaining. We don't want to support any initiative which is ad hoc and will fail.

We've got to get our people to think about competing. We need to adopt a value chain model in whatever we do. In dealing with these clients of ours, we can't just simply say that we are supporting ODOF. I'm not interested in dealing with people who are content to just scratch the surface. I want people who think big and then I can support them.

Remittances can be a serious engine for economic growth as evidenced by countries such as Turkey or the Philippines. Remittances in 2016 amounted to $2 billion. Taking into account that the UK is home to one of the largest Ghanaian diaspora populations, what can GCB Bank do to harness this potential?

I used to be the aggregator of all funds headed for Ghana. So I have an excellent relationship with all of the money remittance companies. I'm happy to say that whether by design or fate, I used to channel a lot of the monies into GCB Bank because GCB has the largest footprint in the land, in terms of paying out and so on. It's been wonderful for GCB. I've been giving my treasury departments a very hard time because I want them to capitalise on the opportunity to let me buy more from these money remittance companies because that is the way forward. We need that foreign exchange to do lots of things and we can't allow anybody else to be the preeminent player. If I had my way I would encourage more Ghanaian money remittances companies rather than companies like MoneyGram and Western Union who have worldwide coverage. Why do they need Ghana? But we have to deal with them. The Ghanaian diaspora has been very good in terms of remittances to their families. I have made many speeches in the UK, and I can remember that without these Ghanaian diaspora remittances, governments in Ghana would not have been able to function.

What are the competitive advantages of GCB Bank?

One of the things I'll say immediately is that GCB bank cannot do everything. We cannot be a player in every sphere of banking. We have to gradually focus our minds on doing that. What I eventually want to put in place is more of a JP Morgan model with an investment banking wing, a commercial banking wing and a trading wing.

I believe passionately that each and every branch that I have is a business unit all of its own. That is what I'm bringing to the table. I want everybody to think about my branches as business units.

What would you say to encourage UK investors to invest in the country?

I would say to UK investors that they are missing out on a good thing. Ghana is blessed with peace. Ghana is blessed with forward-thinking people. Ghana is ready for change. Ghana is the place to do business. Ghana has a business friendly government. The president of our country is one of the UK’s own products. They cannot deny that. When you have people like me who have been UK trained coming back home, what better partnership can they seek?