Economic instability threatening banks - Ishmael Yamson

Ishmael Yamson, Board Chairman of Standard Chartered Bank Ghana, has expressed concern about economic volatility and uncertainty in Ghana which has made commercial banking riskier than previously.

Speaking at the bank’s 120th anniversary public lecture in Accra recently, Mr Yamson also said the economic volatility was affecting the profitability of banks.

“The increasing competition in the commercial banking industry, not only from the increasing number, but also financial technology companies, now also poses major risks to the survival of the industry.

“Regulation pressures- domestic and external- have now become extremely onerous with severe consequences with breaches, intended or unintended. And the question is: can our regulatory framework keep pace with the technology developments in the banking industry? Can we be part of the global banking industry in the technology age?”

Financial crime

He called on banks to lead the fight against the rising financial crime, including money laundering, tax evasion among others, and understand global policy developments in the US, EU and the UK following Brexit and their implications on Ghana.

The growing consumer expectation of banks, as well as their speed, capability and infrastructural capacity could be used to adequately respond to the aforementioned challenges, he stated.

“Customers no longer want a physical bank to transact business because they have limited time. How fast has the banks digitized and how fast have they used technology to bring back pleasurable experience? These will be the key success factors in the short to medium term.”

The country’s financial system would become more responsible if sector policy frameworks were set right and well calibrated to organize value chains that provided a reasonable degree of certainty to private investors, Kweku Bedu Addo, Managing Director of Standard Chartered Bank Ghana, said.

“So I think there has been some misalignment between policy intentions and the real sector outcomes issues to address.

“For the respective sector value chains to be better organized to attract private investment, it requires critical and strategic planning, broad consultation with stakeholders and good execution to solve the problem.”

Lack of policy credibility

Dr Kwesi Botchwey, Chairman of the National Development Planning Commission (NDPC), who was the keynote speaker, touching on government’s consistency in implementing its home-grown policies under the IMF programme, said: “we said we were going to curb government financing by BoG, bring down the rate of inflation, improve the administration of wages and were going to curb and flush out malfeasance in the wage bill.”

“We stated all these boldly. Before we went to the Fund, these were all in our home-grown programme. The problem is we were not implementing these things in the home grown consistently. So for three consecutive years, we had set targets and missed them, leading to a lack of policy credibility.”

Justifying government’s 3-year extended credit facility arrangement with the IMF, Dr Botchwey said: “We were not dragged to the fund screaming. We went on our own, and changes have happened since.

“Improvements have happened from the steady implementation of the policy. We have paid a high price. We did a massive fiscal adjustment of the order about 3 percent of GDP. Very high indeed, but I think it was to restore confidence.”