High transaction cost killing economy - Minister

Accra, Jan. 19, GNA - Mr Yaw Osafo-Maafo, out-going Finance and Economic Planning Minister on Wednesday said the continuous high financial transaction cost of banks would stifle accelerated growth and development.

He said: "The financial transaction costs of the banks is just too high, government has done its best to call for reduction, but it looks as if anytime that is achieved, the banks find other means to cover".

Mr Osafo-Maafo said this when he officially opened the Standard Trust Bank Ghana Limited, a new bank jointly owned by Ghanaian and Nigerian individual and corporate investors with a capital base of ten million US Dollars, a figure far in excess of the Bank of Ghanaian requirement for a Universal Banking License.

Standard Trust's main objective is to democratise the financial services industry in Ghana, introduce new variations and place special emphasis on customers as well as make its products widely accessible to all.

The Bank's minimum savings and current account capital requirements currently stand at 50,000 cedis and 100,000 cedis respectively, something, which many analysts believe will trigger healthy competition in the sector.

Mr Osafo-Maafo lauded Standard Trust's mission and said it fell in line with Ghana's implementation of the financial sector reform strategy, which seeks to deepen the intermediation processes to make the sector efficient in the mobilization and allocation of funds that would fully integrate into the global financial systems.

Mr Osafo-Maafo said capacity development and training programmes in micro finance issues for micro finance institutions to enable them to play the catalyst role for financial service delivery and deepening for small and medium scale enterprises (SMEs) was required.

He called on the Bank of Ghana to urge the financial institutions to lower and eliminate avoidable transaction cost to the business community, increase industry's accessibility to credit and finance and deepen services delivery.

Besides, he said "government will continue in the coming years to improve its macro-economic management, ensure stronger and more facilitative and regulatory framework and deepen financial services..." Mr Osafo-Maafo said it would also actualised the take-off of both the Venture Capital Fund, which would address the inadequate capital financial problem of SMEs and the Long Term Savings plan to deepen savings mobilisation for the economy, both of which have been passed by Parliament.

Mr Osafo-Marfo announced that the complementary laws to strengthen the payment system bill, namely the Foreign Exchange Bill and the Bill and Cheque Bill would be promulgated this year.

"We will also pursue the final passage of ancillary regulatory laws such as Credit Bureau Law and Money Laundering Law to strengthen the transparency and integrity of the banking system," Mr Osafo-Maafo said. On sub-regional integration, he said, very little was achieved because in the past years ECOWAS had been devoted to peace and stability, but noted that the time had come for paradigm shift.

He said the arrival of Standard Trust Bank was an endorsement of the confidence the business community continued to have in the Ghanaian economy, especially in the rapidly improving financial sector. Mr Kwame Pianim, Chairman of the Board of Directors of the Bank, said the cooperation between Ghana and Nigeria was a good example of the type of West African cooperation needed to build the blocks for construction of a viable and sustainable integrated sub regional economy.

He said "We need to identify and marry the comparative advantages of Ghana and Nigeria to the benefit of the economic and social development of these strategic nations," he said.

Outlining the vision of the Bank, Mr Obeahon Ohiwerei, Managing Director said banking services had become the purview of a smaller minority of the population than was acceptable as large proportions of the services were disproportionately focused towards the few.

He lauded Ghana's democratic achievements and the creation of a good business environment, but said its banking system was "far from democracy saying, "a broad mass of average Ghanaian citizens were excluded from the banking sector".

He said currently it had employed 70 people in Accra and planned to create more jobs over the next three years across the country as it implemented its branch expansion programme.