|
 | 
Interview with
Mr. Alex Ashiabor,
Chairman
August 31st 1999
Contact:
Valco Trust House – Castle Road Branch
P.O.Box CT1778 - Cantonments– Accra - GHANA
Tel: (233 21) 232 770 /3 – 232 776
E-mail: MAB@GH.COM
|
Metropolitan and Allied Bank was the first private bank to enter the main stream banking sector, could you tell us a little bit more about the bank and how you achieved this objective?
As you rightly observed, we are the first private commercial bank to benefit from the liberalization of the financial sector in that regard. The idea came when a group of investors decided that we should set up a small bank to address the needs of the emerging small and medium scale enterprises which might need help but are not usually catered for by the bigger banks. That is how the idea came up. We also decided that we would try and link up with South East Asia for the purposes of sourcing raw materials and inputs for our clients as well as to establish trade links; we wanted to be a vehicle for diversifying the trade. For cost reasons most of the consumer goods even in the Northern Hemisphere are sourced from the South East and we thought we could link up some of our businessmen with the opportunities that may exist in the South East Asia. That is why we established the South East Asia orientation.
What would you say is the mission of Metropolitan and Allied Bank?
The mission of the bank is basically to provide good and efficient service to the small-medium scale entrepreneur who so far has not benefitted fully from the system. This does not mean that they have to be necessarily only local. We link them up with small and medium scale suppliers or other businesses across the globe and we will use our own international connections to the maximum. Our basic aim is one of partnership in development.
What advantages would you say you offer to the small and medium scale entrepreneurs compared to other banks targeting the same sectors?
The advantages that we offer are basically accessibility and the knowledge of problems faced by small and medium scale enterprises. The bigger banks are moving more and more towards the corporate sector and the emerging entrepreneur is being left in the middle. We are trying to cater for this niche market and to nurse them so that even when they grow they will still stay with us because we believe that as their business prospers so also will ours.
How successful would you say you have been and how much have you grown over the last few years?
In terms of deposits we have been growing at a rate of 30 % average per annum and in terms of our loan portfolio growth is around 28%. The problem has been that, managing small and medium scale portfolios is much more difficult than managing the big ones and this is the reason why the big banks are avoiding them. So they come to us with these problems but since this is our mission we tackle them.
Why are these more difficult to manage?
For the same amount of work, you get more out of the bigger companies. The smaller companies do not have well established and sophisticated accounting systems which can churn out cash flows and other credible financial data. We have to sit down with them, show them what a business plan is, how to work out a cash flow, so it is more time consuming. You spend more time on them than on the big corporate clients which have their financial controllers and of course their business is also bigger.
On a human level would you say that this is more rewarding?
Yes, on the human level but business is for profit and it is also profitable. For our size the level of profit we make is reasonable. But as we grow we have to look out for bigger business. Our hope is to grow with them. At the time that we started, the business of new banks was to entice customers from other banks but you cannot keep sharing the same piece of cake all the time with a growing population. So our philosophy is to expand the base by nursing new businesses which can then become our clients. I can say we have been partially successful for our size.
How do you market yourselves, is it by adverts, word of mouth, or is your good name an advert in itself?
It is both. We do a lot of adverts locally because we are locally based. We also pay a lot of attention to the quality of our service so our satisfied customers do the word of mouth part.
Are you technologically up to date considering the Y2k problem? Also, do you offer your customers technological advantages over the other banks such as satellite banking and ATM machines?
First of all we are fully Y2K compliant. We use Citibank software and they have come to update it and given us a certificate. Our hardware has also been checked and the few that were not compliant have been removed from the system. With regard to the trends towards electronic banking we do not have that yet but that is our next step.
How many branches have you got?
We have three, but intended to open two more by the end of the year though it is getting late now. We might do that by the spring of next year. We are doing it rather slowly but once we reach a certain threshold then we can expand a little faster. We are reviewing our branch strategy now and depending on what we decide, we might move faster.
What are the decisions that have to be taken?
It is very expensive to develop a branch so we are weighing the options of having a main branch and having satellite branches which are smaller, using ATM and linking up with the main branch. In the small residential areas, for example, it is not everybody who wants to make a transfer or establish a letter of credit or pay import bills. They just want to put money there, take money out and pay bills. The satellite branches can do that and when they want complicated services, they come to the main branch. We have not come out with the final decisions yet but when we do then we can expand faster. But to open a full complete branch is very expensive and for a small bank like us, it will be very slow if we adopt that approach.
How would you like your bank to be positioned to achieve Ghana’s objectives which are being outlined in the Vision 2020 since your target is the small and medium scale enterprises?
I believe our mission fits very well into the objectives of Ghana’s Vision 2020 to the extent that the small and medium scale sector is really the predominant sector except that they are not yet fully monetized. They are not yet fully integrated into the financial system. So what we are doing is to bring them into the system. We particularly like to help those in the export sector and in that respect, we will be contributing substantially to the objectives of the Vision 2020.
| Ghana is increasingly seen as the Gateway to Africa. Any investment that comes into the country or the continent will have to come through the banking system. What links have you established to ensure that foreign entrepreneurs are guaranteed efficient and supportive partners in the for of Metropolitan and Allied banking?
We have very good links with our corresponding banks abroad through whom transfers, both in and out of the country, can be made and in the market, we have a reputation for efficiency in making outward transfers. With regard to inflows, people think we are too small so the investors are shying away from us. In terms of the inflows from the export side, most of the big export firms are dealing with the big banks. They are looking for the big players so we have a problem there. But we have the capacity to handle these flows without problems and we have very good links with some of the brokerage and security firms in the country so that investors coming in can do their transactions on the investment banking and on the commercial banking side. We have a problem of size and of history. People say we are only five years so they shy away, I think it is a mistake but that is their privilege so there is nothing we can do about it. Maybe they will come to the realization in time that efficiency and competence are more important for business than just size.
Who are your correspondent banks?
Our principal correspondent bank is ABN Amro on Madison Avenue, New York and they have been very supportive. Then we have Citibank on Wall Street in New York and for some of the local clients who prefer to deal with London directly, we have the Ghana International Bank in London. ABN Amro and Citibank have branches all over Europe and as a small bank we feel we do not need to have too many correspondent banks.
In a world that is becoming a global market place, are you looking for direct foreign partnerships to help you grow?
We do in fact have a 30 % Malaysian equity interest in the bank. But equity participation apart, we are looking for opportunities to manage investment funds and to give advice to investors. We have a lot of potential in this area. Our senior staff consists of very experienced individuals with wide ranging international exposure at high levels.
What we find disappointing, is that donor funding institutions keep talking about helping small and medium scale enterprises in the private sector yet when it comes to channelling of funds, they prefer to deal with Government institutions and large banks which are more oriented towards large corporate clients. Moreover, interest rates are still quite high and unaffordable for the smaller enterprises. Donor funding agencies need to make available loanable resources at affordable rates. These should be channelled through the smaller private sector banks which deal with the target sectors to ensure effective credit delivery. We have the experience and capacity to do it.
On a more personal level can you tell us a bit about yourself and how you came to be Executive Chairman of Metropolitan and Allied Bank?
I have been in banking all my working life. When I finished college, I worked with Central Bank for many years until 1982, when I retired and went to the UN, where I worked with UNCTAD in Geneva from 1982-1993. I was Director of Commodities Division for five years. Later, I was assigned as Director in charge of the UN Program for Africa for the rest of the period that I was there. I retired and came home in early 1994. It was then that some entrepreneurs approached me and suggested we should try to form a bank so I decided to try it out.
What would you say has been your greatest challenge since you have been in this bank?
The greatest challenge was changing my mode of thinking from that of a financial analyst and public policy advisor to that of a profit oriented business executive. This latter, requires a totally different frame of mind and it took some time to achieve that.
The second challenge was setting up the bank because it is a different thing going into an existing structure or organization which you just go in to manage. Setting up an institution from scratch when there are no messengers, no cars, no books, no building, no systems etc., is a different kettle of fish. All you have is a blank sheet of paper and you have to form a bank. It has been quite challenging and rewarding intellectually.
When did the operations actually start?
In October, 1995.
Are you satisfied with what you have achieved so far?
I think we could do a lot more if we had the resources. We have a lot more potential than our resources would permit. The bank’s image is bigger than its resources which is a pity. If we could get more resources, we could do a lot more.
What about floating on the Stock Exchange?
Yes. We have set ourselves the target of going public by 2001 but of course, we hope that our profit trends will continue and then on that basis, we should be able to go public.
As you know, we target businessmen worldwide so what is your final message to them?
Donor governments are always talking about encouraging the private sector but when they come here they go to the Government. They should find ways of directing themselves to the private sector. We have a generation gap problem, we say we are running a private sector economy and yet the civil servants with civil service mentality (i.e. not generally profit oriented) formulate the policies for the private sector. I have said earlier that it is not easy to change one’s way of thinking from public sector advisor to a profit seeking business executive. Civil servants do not know how the private sector works. If the donor countries and foreign private investors want the small and medium scale private sector firms to benefit, they should address their energies and resources directly to the people who know the real problems of the small and medium scale enterprises in the private sector. We are the people who know. That is what we are here for.
|
© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
Developed by AgenciaE.Tv |
|
|
|
| | | | | |
|
GHANA
