Letter from the President: To sell or not to sell

Mon, 30 Jul 2007 Source: Daily Dispatch

Countrymen and women, loyalists and opponents, the Central Bank wants to sell it stake in the Agricultural Development Bank (ADB) to Standard Bank of South Africa and the whole nation is going gaga over it? I don’t like talking too much about financial issues because they often make me very giddy. But I am compelled to state my views on this matter because so far, opposition to the proposed sale of the central bank shares has been swift and intense and, I believe, this is worthy of a few words from the excellent one.

Most of those blowing hot air claim that they do not want a national asset sold to “foreigners”. So much for African unity, huh? I thought I heard a lot of those screaming now against the sale of the shares to the South Africans extolling the virtues of African unity just a few weeks ago. I suppose they didn’t think about the fact that uniting the continent would involve ‘foreigners’ from other parts of the continent coming in here to do business, which might include the takeover of some of our prized ‘national assets’. Next time they should think twice before supporting such grandiose pursuits as that for the formation of an African union government.

The ADB is one of the most well-known banks in Sikaman – no doubt about that. It has also been performing quite well, making good profits and all. In fact, it is one of a handful of indigenous local banks which provides auto-loans. Their auto-loan scheme, I am told, is one of a kind because it is designed specifically for farmers and fisherfolk. So why does the central bank want to share its stake in this ‘all important’ bank, which is not doing badly and is supposed to be a national bank for agriculture (the number employer of Sikaman citizens) and industry?

Perhaps, the central bank’s failure to comprehensively explain its position has prompted a lot of the speculation and the concomitant disinformation which has sparked the intense opposition to the proposed sale of its shares to Stanbic (the local subsidiary of Standard Bank Plc of South Africa). The central bank will be doing itself and most of us a lot of good if it came out to tell us why it is no longer interested in keeping its stake in the ADB.

However, I want to hazard a couple of guesses. The ADB was originally set up by an act of parliament as the Agricultural Credit and Co-operative Bank to support the development of the agricultural sector. The ADB is jointly-owned by the central bank and the government of Sikaman, which is the majority share holder. I guess that the central bank wants out because with increasing competition in the banking sector, it wants to concentrate on its core function of regulating the sector – instead of being a regulator and a player at the same time. And that’s the right thing to do, isn’t it? Secondly, I also think that the central bank is very much aware that even though the ADB is not doing badly, the bank has not reached its fullest potential and that a new management, injecting capital and infusing greater expertise, could help boost the bank’s performance, improve efficiency and customer service and make it one of the best banks in the country in terms of market share and profitability.

Those against the sale of shares to the South African bank are concerned that the transaction will be detrimental to the economy (and the agricultural sector in particular). I don’t see how! How can a more efficient, profitable, competition-driven bank be detrimental to the economy? The South African bank has made it clear that it will still be committed to supporting the agricultural sector if/when it takes over the central bank’s stake in ADB. And we can hold them to their word, can’t we?

So far, all I’m hearing from the opponents of the proposed sale of shares is a cacophony of emotive and sentimental arguments which have no bearing whatsoever on the realities of the global economy in which even the smallest countries like ours forced to operate and compete. In the world today, companies don’t go around building new branches when they can acquire assets and merge with already existing but less performing establishments. Mergers and acquisitions are happening all over. In most cases, mergers and acquisitions have helped companies boost productivity and profitability. I don’t care if a merger leads to a monkey from Mongolia running a company as long as the firm is competitive, profitable and socially responsible.

I get the sense that the fear of job losses is one of the reasons why people are so opposed to the sale of the shares to the South African bank. Trust me, new management does not automatically mean that people will have to be sacked. What I know for sure is that if the new management comes in and realises that the bank has too many people on its payroll than necessary, some people will have to be shown the way out. That’s one of the global economic realities we have to start facing up to. In any case, the bank will continue to offer employment to many of our citizens. They won’t bring in people from South Africa to work as cashiers and tellers, will they? Don’t forget that the local subsidiary of the bank is headed by a citizen of this country, which indicates to me that this is a bank which recognises the importance of local knowledge and expertise.

I understand the apprehension and the tendency to want to protect what is ‘ours’ from ‘outsiders’. But in the world today, what is ‘ours’ could be ‘theirs’ and what is ‘theirs’ could also be ‘ours’. Today, it’s a South African bank that wants to buy shares in a Sikaman bank. Let’s look into the future and think about the possibility that if we put our house in order a high-performing Sikaman bank like the Atwima Nwabiagya Rural might in the future want to buy a stake in a bank in, say, Niger. How about that? Think about it.

Excellently yours,

J. A. Fukuor

Columnist: Daily Dispatch