Back BoG to create strong financial sector – Edward Effah

Edward Effah, Board Chairman of Fidelity Bank

Edward Effah, Board Chairman of Fidelity Bank, has said Ghanaians must back the central bank’s on-going reforms to create a stronger financial sector.

“I think the central bank has done well in the last two years to make sure that the financial sector is stronger and banks have adequate capital to do their business and have the right corporate governance, and people who run banks are fit and proper.

“We should all support the central bank in the good work it is doing. At the end of the day, it is protecting the ordinary Ghanaian on the street: teachers, nurses, drivers, pensioners who have put their monies in banks,” he said.

After revoking the licences of seven banks, alongside new guidelines in a reform that has so far cost the taxpayer close to GH¢13billion, the central bank said it is turning its attention to Specialised Deposit-Taking Institutions, including Finance Houses, Savings and Loans and microfinance companies.

The Finance Ministry has already assured the regulator of its support to clean up the Specialised Deposit-Taking Institutions sector, which according to some analysts could cost the state between GH¢2 to GH¢5billion – but will, in the long-term, lead to increased credit for businesses, especially Small and Medium Enterprises (SMEs).

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In an interview with the B&FT, Mr. Effah – who led a team of banking professionals to establish Fidelity Bank just over a decade ago, which is now the fourth-largest bank in the country – pointed out that Ghanaians deserve stronger banks that offer safety for deposits.

“You want banks to be safe places where your money is secure. If you do not do that and we have weak banks, it has a lot of repercussions for the economy. Every strong economy has strong banks.

“You do not want a situation where people do not have confidence in banks and they keep their monies at home. There will be no financial intermediation and development. I think we should all support the central bank in the good work it is doing,” he added.

See banking as international practice

He also urged banks, especially local ones, to see the business of banking as international in nature and not just confined to the borders of Ghana – noting that international partners are necessary in today’s world of banking.

“Banking is not a local business but very much international. All banks work with correspondent banks, and need lines of credit from global banks to be able to do bigger syndications,” he said.

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To be a strong local bank, Mr. Effah – whose bank has strategic international partners such as the KTH Africa Investments from South Africa and Amethis Finance Netherlands B. V. from Europe – added that there is a need for partnerships with some international shareholders.

“These partners can put you on the international stage so you can network and collaborate with others. At Fidelity, they are minority shareholders in the bank but they bring a lot of benefit. We deliberately went for partners who are not just giving us money but bringing networks, contacts, and relationships. Having international partners strengthens you,” he said.

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