Local Banks Hit Gov’t for Giving Contracts to Foreign Banks

As President Nana Akufo-Addo prepares to set up a committee to look into a petition presented by the Association of Indigenous Banks to extend the deadline of the minimum capital requirement, members of the Association are accusing present and past governments of deliberately stifling the growth of local banks.

They argue that governments have consistently overlooked the efforts of local banks and granted huge contracts to foreign banks operating in the country.

This, they claim has put foreign banks in good condition, ahead of local banks, most of whom are struggling to meet the 400 million cedis capital requirement.

The members of the Association made the accusations when they met government at the Jubilee House last week Monday, to present a petition for an extension of the deadline for meeting the capital requirement from December 2018 to December 2022.

Among other issues, the local banks accused governments of giving contracts such as collection of money in key state institutions to foreign banks.

They also pointed out that government is quick in using foreign banks as financial advisers during major projects.

Citing Nigeria as an example to buttress their point, representatives of the local banks argued that Nigeria has deliberately made a policy where a huge percentage of government contracts are awarded to local banks to help them grow, and also help them create jobs.

They maintain that the situation is the opposite in Ghana, where major contracts go to foreign banks.

According to them, these acts have left local banks to struggle for deposits since the government is the biggest spender in the economy.

The local banks also shot down arguments that they must grow their capacity to undertake big-ticket projects.

They stressed that, it is not the business of all banks to undertake big-ticket projects. According to them, banks can always identify specific areas they wish to operate, provided they can make profit.

In addition, they argued that the solution to challenges facing local banks is not to sharply increase the capital requirement in a short period, but to ensure good corporate governance.

Expressing their displeasure in recent happenings in the banking sector, the local banks bemoaned the habit where officials of the central bank and government officials talk down on local banks.

The situation they claim create an impression that local banks are operated by incompetent people.

This they say put local banks in bad light among the public.

Source: Citibusinessnews