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 ECOBANK GHANA Ltd.
Interview with
Mr. Jean Aka,
Managing Director
July 2nd 1999
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Ecobank is one of the most important banks in Ghana and in West Africa. Could you give us a brief historical background to Ecobank?
Ecobank is a private sector initiative born out of the West African Chamber of Commerce where people wanted to do something in common. The idea that came to them was to establish a bank instead of a transport company. In 1988 the head office was established in Lome. The next year other branches came up and by the end of this year we will have 11 affiliates/subsidiaries in 11 West African countries. It is an off-shore company whose assets are denominated in US dollars. The only governmental agency that owns 15% of the shares is the ECOWAS fund which involves all West African countries. Ecobank Ghana started operations in 1990 and now we are the 6th largest bank in the country. Ecobank Ghana has been very successful considering the fact that we came in at a time when the restructuring of the banking system was very keen. We came in, took advantage of the changing situation and built a new banking culture of quality service and that has made all the difference for us. We are still progressing, we are opening branches. The future of Ecobank is very bright, we are the biggest financial group in West Africa now and the most progressive in terms of helping the total integration of West Africa through trade. Unfortunately we have some problems there since all countries have not adopted the ECOWAS treaty of free movement of goods and services. There is a treaty, which if accepted by all should allow free movement of goods, and services across borders with a common tariff system. However the French group have formed their own association within the ECOWAS and goods coming from Ghana to say Burkina Faso which is a French speaking country attracts a penalty of 64% tax. This does not encourage West African trade. There should be a harmonization of tariffs across the border and one of the aims of Ecobank is to ensure that this happens. We are also trying to enhance the payment mechanism. The problem we had before was the carrying of cash across the borders by traders and we are encouraging them to use our system as a way of payment. Now we cover all Francophone countries in West Africa. The problem now is to harmonize settlements of trade and services amongst the Anglophone countries without using a third/foreign currency.
At the moment the problem you are facing is restriction on trade. How long do you think it will take for all these restrictions to be erased or lowered?
If the West African countries want to take a cue from the European Union and the common currency which they area talking about, then the first thing is to streamline the import duty on goods across borders. One problem is that most West African countries have similar industries and each one is trying to protect its own market. To make it free without restrictions the Francophone members within the ECOWAS should streamline their import duties for goods and services from the English speaking countries.
As a wholly owned African bank and an international bank within Africa, what advantages in services do you offer in comparison to some of the other banks here in Ghana?
The group is a commercial bank except that in Ghana we are registered as a merchant bank. 3 days ago we sent a letter to the Bank of Ghana to allow us to become a commercial bank. We are offering commercial banking services together with our own products across West Africa. As a merchant bank in Ghana we have done a lot in terms of IPOs and putting more companies on the Stock Exchange. We were the main promoters of the Stock Exchange in 1990. In addition we offer first class corporate banking, funds management and trade services.
Are you on the Stock Exchange?
No, Ecobank Ghana is not on the Stock Exchange but Ecobank group will be on the Stock Exchange by next year.
Which other Stock market is Ecobank Ghana listed on in West Africa?
No other market. The group is coming on Nigeria, Ghana and Cote d’Ivoire Stock Markets next year.
What in your view are the main operating advantages of working in Ghana?
I came in from Cote d’Ivoire working for Citibank and Chase Manhattan for 13 years. I came in with a new culture of banking, customer care and aggressiveness in marketing. That has made us very successful. When we started there was no money market, consortium lending was basically zero in this market. We have been able to create an inter-bank market in this country, bring the idea of consortium lending, initially it was difficult but now we are getting cooperation better than before. Our function in this area is second to none and we are glad to be the leader in this sector of the market.
What would you say have been the main operating disadvantages?
Being a merchant bank we are not allowed to expand as fast as we want to so all these successes have been based in Accra. We cannot get closer to all potential customers. Since West Africa trade is one of our basic objectives then we should be allowed to become a commercial bank and get closer to traders especially the individual traders and bring them to the formal sector. Right now we are stuck because we cannot compete with the commercial banks in terms of mobilization of funds. We are only allowed to deal with the corporate banking sector and that does not help us. Hopefully when the Bank of Ghana opens up for us we will be able to compete strongly with the other four big commercial banks which together have more than 65% of the banking business – this situation is not healthy for the economy in the long run.
As a merchant bank do you provide brokerage services?
Yes we do. In the early 90’s we used to be the biggest brokerage company. Now there are 11 brokerage companies and we are all competing for the business of a few listed companies on the Stock Exchange. We are leaders in West Africa, we are the promoters of the West African Stock Exchange in Abidjan which is being managed from here and we have been very successful in that market.
| How successful is that?
Successful because the market in Abidjan is fairly new and usually we send experts from Ghana to get things done there. Since then we have successfully floated a few bonds on the exchange for some of our clients. In terms of development we are helping Nigeria, Cote d’Ivoire, Benin. We are giving them training.
How would you like banks to be positioned with regards to the Vision 2020 program?
I always say that Vision 2020 cannot be achieved with the present of system of banking. Every bank is going after the small corporate sector which to me has reached its maturity. It cannot expand further than the present level. I think that the banks should help the middle and smaller businesses to grow and that is the reason why we want to become a commercial bank. But if we remain as we are and only finance the few corporate bodies that we have we cannot achieve our objectives. My vision here is that the banking sector should help the small and medium enterprises with growth potential to grow to broaden the base of economic activity so as to add value and future economic expansion.
One of the problems that this country is facing is high interest rates despite the falling inflation rates. What are you doing as a merchant bank to lower these rates?
There are 2 factors to this question. As a merchant bank our cost of funds is rather high in the sense that most of our deposits are fixed from customers who are themselves high interest rate conscious. They want enough returns for their deposits so our cost of funds is very high. To be able to lower interest rates inflation should go down further. We as a merchant bank are at a disadvantage to take the initiative to bring down the interest rate because our costs are high. The commercial banks however have lower cost of funds. Until last year the interest rate on government borrowing was higher than that of the corporate sector though it has changed now and that is more positive. Since interest rate is driven by the rate of inflation which also is highly affected by government fiscal policy, there is very little we can do.
We have come to a time when Ghana is opening itself up to the rest of the world, it is also strategically located on the breast of Africa and the banking sector itself can be seen as a gateway for foreign investment which comes into the country. What is Ecobank doing in order to accommodate these foreign investors?
I should say that we have been very pro-active in this direction. We as a bank have traveled more with the Investment Promotion Council than any other institution in this country. We accompany them to let the investors know that there are some banks in the country that are very progressive. We also work with the Gateway Programme. Our vision is to help the financial sector to grow, help the economy to grow so that more foreign investors are attracted into the country. We are more morally attached to the growth of the countries in which we are. In this direction, we have been helping new investment ventures by providing them with initial working capital and other banking services.
What is Ecobank doing to attract foreign investment? Are you looking for direct foreign partners in a joint venture or are you looking for foreign investment through indirect means?
We think joint ventureships are necessary in our part of the world. The foreign partners benefit from leveraging on the local partners’ knowledge of the local market and the latter the transfer of technology etc.
Could you tell us a little bit about your background?
I started banking in 1972 with Ghana Commercial Bank when I finished my first degree, 2 years after I went to do my MBA and I joined Citibank in Abidjan for 2 years where I got all my training. I joined Chase 2 years after in Abidjan and worked with them for 11 years. Then when Chase sold their branch in Abidjan to Ecobank I was initially seconded to Ecobank Ghana to help establish the bank here. My job was for only 9 months after which I would move to another country to establish another bank. Unfortunately that objective was not achieved because of difficulties at the head office and I have been here for 9 years. They do not want to move me because probably of the good job I am doing here and I am very proud of that. Socially I have done a lot for this country. Even though I am Ivorian born I went to school here and recently the University of Ghana awarded me a doctorate degree for all the work I have done in the 8 years that I have been here. In terms of who is who in this market I think Ecobank is very respected because of the efficient way in which we operate. We do not have bad loans and our integrity is very high and our ethical values are second to none and this is all because of the leadership that we have. Employees are happy because we motivate them by giving them responsibilities which they are happy to accept. I am adopting a leadership attitude not a bossy one. Every one here is a colleague not a subordinate but that does not mean that they do not look up to me as their managing director. I do not want them to call me boss, I want them to call me by my first name because I treat them like colleagues and this has made a difference and I am very proud of that.
If you should give any advice to our readers who are mainly investors, businessmen, which is the sector that you would say has the most opportunities to offer in this country?
Ghana is an agricultural country and apart from gold which has attracted so many investments in the last 10 years, any agro-based industry would be very welcome, in terms of, converting locally produced raw materials into finished goods. These could be tomatoes, chocolate, palm oil, coconut, rubber industry which is very big. Investors should also take advantage of the Export Processing Zone, look at West Africa and things that can be exported. In terms of education the capacity is there for growth, there are well trained employees and very cheap too. In terms of dividends and capital outflow there is no restriction, they can be transferred easily. We have a democratic system which is working and will continue to work because Ghanaians naturally are peaceful people. There is peace and stability here.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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