Innovation increases savings in financial institutions - deputy governor.

Tema (Greater Accra Region), 16 Nov.1998

Innovations initiated by financial institutions in the country have resulted in a significant increase in public savings, Mr E. Ossei Kumah, deputy governor of the Bank of Ghana (BOG) has said at Tema. He said that savings, nation-wide, rose by 26 per cent in 1995, 35 per cent in 1996, and 49 per cent in 1997, adding that the habit of savings is catching on in Ghana due to the innovative incentives introduced by the banks. Mr Ossei Kumah who was speaking at the commissioning of a branch of the ECOBANK in the harbour city, said the innovations have significantly supplemented the central bank's efforts to mop up excess liquidity and control monetary growth, thereby reducing inflation. The innovations include door-step cash collection, mobile banking, improved forms of communications for opening of savings accounts without customers having to appear physically to make deposits, and the institution of education funds for children with high compound rates.

Mr Ossei Kumah urged the banks to do more by offering especially, more attractive deposit rates and to develop efficient mechanisms for nurturing industries and companies into maturity to improve the performance of the private sector. "There is the need for the banks to sharpen their tools of loan approval and recovery to acceptable standards, not only to improve their asset quality but also to facilitate direct investment inflows". He said investment in human capital by the banks would go a long way to equip them to carry out this important task. Mr Ossei Kumah stated that a major initiative to improve the performance of the financial system was launched by the central bank in 1988 under the financial sector adjustment programme (FINSAP). He said the programme has succeeded in enhancing the soundness of banks by improving the regulatory framework and strengthening bank supervision in restricting financially- distressed banks through the infusion of new capital and management expertise. "The financial system is generally in a better shape now to make its requisite contribution to the development of the economy due to management expertise and improved asset quality of banks". The deputy governor said a viable financial system could only emerge in a stable and predictable macro-economic system because in such an environment, savers have confidence to invest their life savings in durable financial instruments with attractive yields. The establishment and growth of a monetary market has provided an attractive avenue for small savers and investors to invest in treasury bills. According to the deputy governor, the BOG has exercised a fairly successful supervisory responsibility over the financial sector to ensure stability and this has contributed to its smooth functioning. Mr E.P.L. Gyampoh, chairman of ECOBANK, Ghana Limited, said the opening of the branch at Tema brings the number to three in Ghana. It has 29 branches in West Africa with its headquarters in Lome, Togo. He said ECOBANK, founded in 1985 as a private regional banking and financial group, is owned by 1,400 individuals and institutional shareholders from 16 countries in the economic community of West African states. ECOBANK, he said aims at providing a full range of commercial banking and financial services to customers.