Banking Sector in Ghana: Overview of Ghana Commercial Bank

Interview with Simon Dornoo, Managing Director of Ghana Commercial Bank

What are the advantages of Ghana Commercial Bank for new entrants into Ghana market? Why should they come to you?

GCB is a household name in Ghana with the largest distribution network across the country and a very strong balance sheet in terms of liquidity and capital resources to support new businesses in Ghana. We have developed a long track record of facilitating international trade transactions which we do because of strong working relationships forged with correspondent banks abroad over the past 60 years. GCB has strong public sector financing credentials.

What kind of support will they find in Ghana to make it easier to do business?

First of all, the Ease-of-Doing business Index shows that Ghana’s business environment is trending in the right direction. Institutions set up to facilitate investor needs are all undergoing reforms and I see the government’s e-gov project, which is aimed at putting all such institutions on electronic communication platforms in order to simplify and speed up business registration and transaction processing as providing further impetus to the pace of reform.

The country is an attractive investment destination with the medium-term outlook looking good going by growth forecast. We are seeing an increase in the number of investors and tourists coming into the country which I consider good indicators of the attractiveness of the country. There is a comprehensive legal framework that protects investors, a strong civil society and media that promote transparency, good corporate governance and accountability.

Which branch of the government is working on this initiative?

I understand this is is collaboration between the Ministry of Finance and the Ministry for Communications, along with the World Bank.

Coming back to the bank itself, what are the major challenges that you are facing?

Our customers set our agenda so we always have to focus on at least meeting their expectations. Our customers expect excellent service, convenience and access to expertise. The number of banks has increased from 15 to about 28 over the last 10 years and technology has made it possible for banks to offer similar products and services to customers wherever they want it. We therefore have to adapt or face the risk of losing market share. We are responding to this by investing in the right places, the right people and the right products to ensure that we protect our franchise in order to sustain growth and profitability. So far it is going quite well and you can see that from the performance of the bank.

What companies are you partnering with to improve the technological service? Are there companies here in Ghana that are up to the standards that you expect?

Our technology partners are leading providers of banking technology in their industries. We work directly with them or through their representatives in Ghana. Aside from that we have good local companies that develop bespoke solutions to meet some of the needs.

Can you tell us about the recent performance of the bank?

Our 2012 results were outstanding. GCB outperformed the industry recording the highest ROE of 49%. We have also seen this strong performance reflect in the Bank’s share price which is also outperforming the Ghana Stock Exchange index and other indices in Africa. We are doing everything to sustain this performance by channeling resources into the right areas and focusing on execution of our priorities.

Do you think international banks will be coming to Ghana?

I think so. The country benefits from the presence of international banks in the market especially when it comes to leveraging balance sheets of their parent companies to finance large transactions. The debate is however on about whether or not there are too many banks; I’ve always argued from the point of view that Ghana needs strong banks not too many banks; if it is about access banking then stronger banks are in a better position to deliver that objective because of the relatively large capital base. I think policy makers should design policies that improve access to banking without imposing huge supervisory costs that tends to be associated with having too many banks.

You have international experience. You have seen the growth of Ghana in recent years. It is developing at a very high rate at the moment but where should it be heading?

That is a very difficult question. I think just listening to what people complain about we need to provide the needed incentives for investment in the power and energy sector. We need to invest in our energy infrastructure to sustain the impressive growth rates recorded so far. SMEs have a key role to play in the country’s growth agenda but they are constrained by lack of access to finance. This needs a coordinated approach to resolve some of the challenges faced by banks in lending to SMEs.

Do you have a message for investors?

Ghana is clearly an attractive destination. Very few countries in the world are growing at 8% and the outlook continues to be very positive. Ghana is also strategically positioned in terms of proximity to key markets in Europe so has major cost advantages such as freight cost for the horticulture or fresh fruit industries. Secondly, the technology base of the country is growing so rapidly that today many households have access to mobile phones and internet. The economy has moved along quite well so it’s an opportunity for investors to participate in before it’s too late.