NORDCOM Africa Holdings: Overview of the Financial Sector in Ghana

Interview with Edem Bart, CEO at NORDCOM Africa Holdings

What is your assessment of the financial sector in Ghana?

The financial sector is very stable and very lucrative. Most financial institutions have increased their assets based on profitability, not in single digits, but in even double digits over the past five years. There are a lot of players and the new government needs to stabilize the market. We can do a lot of transactions, but most of these big-ticket transactions were through foreign finance. Most of the financial sector was dominated primarily by the local banks who serve the SME market. Therefore, the government felt the need to shore up the capital base of the local banks for them to also be competitive and to aid the government in achieving its own goals, because most of their projects will be financed by the banks. Hence, there is a lot of increasing capitalization reduction in banks. Those banks who are not solid are going down. Last year, UT Bank, Capital Bank, and Unibank all were liquidated. It is very good for stabilizing the industry; however, from the customers’ perspective, they become very apprehensive, especially dealing with local players. If Tier 1 banks are going down, then we have that apprehension dealing with investment companies, dealing with savings and loans, dealing with microfinance, that then becomes fear, and then everybody tends to move to deal with foreign banks. It will take a couple of years, not months, for customers to recover. Money is blood and when the financial system is stabilized, then you can have that confidence to invest in the lower tier financial institutions. Also, the reforms will then start with pension reforms, the security industry reforms, etc. There are a lot of reforms now and all these things in the long run help stabilize the financial system. Currently, though, it is a watch and see situation for the investors. Financial institutions have a lot of non-performing loans which is counting against them. One key thing that the government is driving which we also support is corporate governance. In Ghana, we have a lot of owner managed businesses where corporate governance is not strong. The regulators are now introducing many corporate governance policies to strengthen how we govern our various institutions. The industry is good, but there are also more prospects going forward.

You have created a new institution to answer some of the needs of the client. What have you done here and how can you answer the needs of the people that are not sure about local financial institutions? What are your competitive advantages?

Our competitive advantage is that the regulators are now talking about corporate governance and that is an area we do very well in. We try to separate all the duties and responsibilities and bring people in. Nordea has been in business for five years, and we started from nothing to get to where we are now. If we had not put all these measures into place, we would not have achieved what we have achieved so far. Another aspect is that there is a bigger vision that we want to set up which is a financial conglomerate. We started with Nordea and Nordea gave birth to ESA and that has given birth to NORDCOM Africa Holdings. Currently, we are consolidating our gains and consolidating our achievements with these three companies. Within the next few years, we will start expanding vigorously. That is the strategy that we are pursuing. But we are doing this with our own resources, with dedication, and with hard work from the staff. We are growing organically. We have come to a point where, when we have foreign partners come in, it will usher us into the next phase of growth that we envisage. My Board and the shareholders have a philosophy: owning ten percent or twenty percent is better than owning a hundred percent of nothing. Therefore, we are where we are now, but we need investors to propel us to the next stage, and that is where we are preparing ourselves to be.

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