The Managing Director of Bank of Africa (BoA), Mr Kobby Andah, has described the revisions of the forex rules by the BoG as necessary because according to him, the market did not understand it.
The BoG last week bowed to pressure from the industry and reviewed directives it introduced some months ago to shore up the local currency against the dollar and other major foreign currencies.
The directive, among other things, placed a limit of $1000.00 on over-the-counter foreign exchange cash withdrawals at the country’s banks, a directive which forced exporters and businesses to hold back their dollars.
This led to the unavailability of the dollar on the market which further weakened the cedi.
Mr Andah, therefore, believes the directives failed because the BoG did not provide enough education on the measure.
Mr Andah disclosed this in an interview with the media after the launch of BoA’s new cash transfer service, WARI.
He said the high demand of the dollar was what pushed up its price and therefore the BoG tried to reduce the number of locations that one needed to use foreign currency on the market.
He said the BoG, however, failed to better educate the market to understand that the policies were not to freeze their monies in the banks.
High interest rates
Mr Andah also challenged the public to look at the financial statements of banks before assuming banks are making huge profits because of the high interest rates.
He said the public should look at the capital reserves, the capital that shareholders had put into the banks, and then compare that to the profits they made.
“Then you can say whether you think those profits are abnormal or not.’’ You know, when we talk about banks’ profits, we also forget about the investment that have been made in the banks,’’ he said.
He said banks also had to factor in the risk element inherent in balancing and the need to have reserves to cover and absolve risk.
“When you give credit to an organisation, you start earning interest from day one. It might be a two-year exposure, anywhere along the line, if that goes down all the profit that you have made and the paid tax on it, you would have to bring it back. You would have to cover the risk to it. You need to have a solid reserve to cover you for market shocks, some of which we did not anticipate, like what is happening to us now,’’ he added.
He said the high interest rates were a problem because most borrowers of money would not be able to borrow at those rates and make a return that would allow them to pay back and earn a good profit and that situation increased the rate of defaults.
WARI cash transfer service
The Bank of Africa launched a cash transfer service, the WARI Money Transfer, aimed at meeting the needs of the unbanked Ghanaian population.
The service allows people to receive and send cash both locally and outside the country.
WARI is currently available at all 19 branches of Bank of Africa in Ghana and is expected to be rolled at other banks in the country, including First Atlantic Bank, Express Funds Transfer as well as rural banks and savings and loans companies.
The Head of the Alternative Channels of the bank,Mr Ahithophel Dwomoh, noted that what set WARI apart from existing money transfer services was its “cheap” tariff structure.
“Some of the transfer services that are on the market now are based on the percentage of what you send, for instance, but with WARI, the charge is in bands, so it makes it cheaper”, he said. GB