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Nigerian enterprises oiling Ghana’s economy

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Before 2005, there were no fewer than 95 Nigerian commercial banks in an amorphous pack, with many of them showing deep signs of systemic malfunction and dense stress, requiring a surgical operation to avoid the unpleasant and unprecedented distress of the 1990s.

So when Central Bank Governor, Chukwuma Soludo applied the surgical blade through his bank recapitalisation reform between June 2004 and and December 2005, it was no surprise that the high number of banks shrank to 25 through mergers and acquisitions.

The number has further dropped to 24 with the IBTC-Stanbic Bank merger, resulting in the emergence of vibrant, well positioned and capitalized banks.

Analysts say that these banks, with N25 billion as their minimum capital base, can stand the test of time in any tempestuous financial market as a result of the recapitalisation programme.

A net result of the recapitalisation is the recognition of some of these banks globally as efficient service providers.

For instance, UBA Plc, which was honoured this year as Africa’s Global Bank, recorded gross earnings totaling N169.9 billion for the period ending Sept. 30, 2008 compared to N109.5 billion in the corresponding period in 2007.

Its balance sheet rose by 39 per cent to N2.3 trillion during the period under review.

Equally, Intercontinental Bank, Guaranty Trust Bank (GTB), Oceanic Bank, Zenith and Fidelity have won various international awards this year for their excellent banking services and wide range of products.

But how far have these banks gone in extending their services offshore, particularly in the West African sub-region, to oil the economies of these foreign countries and thereby add value to their gross national product?

Industry watchers note that at least five Nigerian banks, UBA, GTB, Zenith, Oceanic and Intercontinental — are firmly rooted in some ECOWAS countries, including Ghana.

For instance, UBA Plc, which has operating licences in 12 African countries, has 19 fully networked branches in Accra, providing wholesale banking services to corporate and institutional clients, as well as individuals and small-scale entrepreneurs.

Records indicate that UBA is the only sub-Saharan bank with dual presence in the U.S. and the UK.

The bank, along with others, has introduced electronic banking Services such as Automated Teller Machine, SMS Alert and E-statement.

Experts say that these services are novel in Ghana whose local banks were hitherto considered to be conservative.

For Mr Joe Appiah, a management consultant with an experience of more than 35 years in Nigeria, Ghana and elsewhere, Nigerian banks have revolutionised banking in Ghana.

“Ghanaian banks are very conservative in their services, but when the Nigerian banks came here, they started to offer novel services.

“They give their customers, especially civil servants, loans to buy cars and other luxury items, a business practice not undertaken by Ghanaian banks before,” he says.

A government worker, Mr Addo Mensah, corroborates Appiah’s observation, saying that with loans obtained from one of the Nigerian banks, he was able to furnish his home and send his two children to fee-paying schools.

He particularly notes the bank loan’s easy repayment schedule and advises local banks in his country to emulate their Nigerian counterparts by introducing innovative products and services.

Ghana and Nigeria have come a long way in their socio-economic ties, and the economic summit held between them months ago in Accra provides a vital platform for energising and consolidating the ties, experts say.

For Sen. Musiliu Obanikoro, Nigeria’s High Commissioner to Ghana, the summit has deepened bilateral economic relations for the first time since trade between both countries had been largely informal in the past.

“The summit has provided a platform for the business community to make an input into the formulation of government policies. Besides, it will eliminate trade barriers between both countries,” he explains.

Obanikoro says that Nigeria and Ghana need to invest more in their bilateral relations if the West African sub-region is to prosper.

He says that the entry of Nigerian banks into the Ghanaian financial industry is a welcome development that will bring out the best in a healthy environment.

As Nigerian banks do the country proud far away from home, other enterprises such as Arik Airline, Aero Contractors, Glo Mobile which is set to roll out early next year, ABC Transport, Cross Country, IGI Insurance and Ovation offer complementary services.

They combine with other Nigerian businesses to prop up the economy of Ghana, considered a longstanding ally of Nigeria .

Much as both countries are enjoying flourishing economic relations, there are complaints of discriminatory trade policies by some Nigerian businessmen against the Ghanaian authorities.

However, Obanikoro explains that the law making foreign entrepreneurs to pay certain charges to the Ghanaian treasury “has been in existence for long”, suggesting that the complaints against any discrimination are not well founded.

The high commissioner says that there are other legal issues to be resolved between both sides and adds: “We should not allow this mild distraction to disturb our bilateral relations.
“All grey areas will be sorted out in due course.”

As Nigeria and Ghana relish the distinction of being stable democracies in the past eight years or more, analysts suggest a reinvigoration of their economic ties to provide the precious pivot for sub-regional growth and development in a globalised economy.

The time to set on the attainment of this objective is definitely now, they say.

Credit: Kola Danisa

Source: Daily Triumph

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