Capital base is more important

Banking in Ghana seems to be booming with the influx of new banks and the introduction of various competitive products and services to meet the demands of the public.

The Chief Executive of Fidelity Bank, one of the new banks in operation, however says though the influx of banks is good, that should not be the ultimate. He says the focus should rather be on whether the banks have enough capital base.

Mr. Edward Effah says the ability of the various banks to survive would depend on their capital base, adding that it is an important fact in trying to meet the economic needs of the country.

He was speaking at a ceremony in Accra during which Fidelity and two other banks signed a $25 million loan agreement with the International Finance Corporation (IFC) under the IFC’s Ghana Mortgage Market Initiative.

The initiative is aimed at boosting residential mortgage lending and provide better access to housing finance for Ghanaians.

Mr. Effah likened the situation of the number of banks to that of the increased number of hotels in the country saying that “even though there are a lot of hotels in Ghana there are not enough rooms for visitors to lodge just as there are a number of banks in the country but is their capital base big enough to support and invest in the country?”

He added that in countries like South Africa, one bank is bigger than three or four Ghanaian banks put together. He was however quick to point out that Fidelity Bank has enough capital base to meet the demands and also support the economic growth of the country.