The Governor of the Bank of Ghana (BoG), Dr. Henry K. Wampah, has urged what he called the “big banks” in the country to provide financing to bridge the infrastructural gap and demands in the oil and gas sector.
“With the advent of oil and gas, the demands in the energy sector and the lack of infrastructure in the economy, we need banks with scale and the necessary international connections to leverage on international capital and provide the needed funding for these activities.
“Thus, while small banks are necessary to deal with the small and medium sector, there are no big banks that can shoulder the demands for large oil and infrastructure financing on their own without some regulatory intervention,” he said.
This, he said, does not bode well for the kind of rapid growth and economic transformation expected of a lower-middle income economy such as Ghana.
The Governor of BoG said this at the launch of First National as a universal bank in Accra.
He said while the country’s banking system has grown over the years and continues to attract prospective investors, domestic and foreign banks are virtually doing the same thing that the others are engaged in — thereby exhibiting the same handicaps as their forebears.
“The economy is growing and calling for a different kind of response from the banking sector,” he added.
According to the Governor, the banking industry is transforming globally — whereby size, linkages, innovation, diversity and resilience, buoyed by strong capital and good risk management is the name of the game.
He said though the operating environment has been challenging in recent times, this should not stop the banks from thinking globally and acting locally.
“In the wake of financial tsunamis and hurricanes, we must seek to grow our banks so that they will be responsive to our needs and able to withstand the turbulence and vulnerabilities in the banking landscape.”
Mr. Wampah added that the evolution of the banking system in response to the needs of the economy has to be taken seriously, saying: “We need to engage in serious discussions on these matters and we need to rise above partisan, parochial interests and look at ways of deepening our banking system which enables it to support the next stage of our economic growth”.
He said the central bank is prepared to engage and guide honest and frank discussions of these matters, and provide the necessary leadership in transforming the banking sector over the coming years.
In response to emerging trends in the banking landscape following the global financial crisis, Mr. Wampah said BoG is in the process of finalising a new Banks and SDI bill to address key weaknesses in the regulatory framework, as well as build a safety-net for small savers through the introduction of a deposit insurance scheme in the country.
These pieces of legislation, he said, will bolster the supervisory framework and build confidence in the banking system. He said these have received wide input from both domestic and external constituents, and will be placed before parliament in due course for further debate before passage into law.