The original report was distributed in Financial Times Deutschland on Friday, April 13, 2012
Not your run-of-the-mill government bank
Simon Dornoo, Managing Director of Ghana Commercial Bank, discusses the bank's growth plans, unique products, social projects, and customer-oriented services
I would like your perspective on the challenges to future growth and development in the banking sector.
The banking sector is going through a very interesting phase of its development at the moment. Pressure from increased regulatory capital requirements, competition, and the general downward trend in interest rates pose enormous challenges for small and less robust banks. So I see consolidation taking place and I see returns on capital squeezing. On the brighter side, the economy is also diversifying, bringing along new opportunities for growth.
You started off as the first indigenous bank in Ghana. Obviously there have been a lot of changes, however the unbanked population is still considered high. How does Ghana Commercial Bank deal with this unbanked population? What initiatives do you have in order to capture that market?
The unbanked market in Ghana is characterised as low-income earners, people with no or very little formal education and the self-employed with no employees. These people feel intimidated about banking halls and think banks always take their money by levying all sorts of charges. We are adapting appropriate technology-based products and channels to serve this unbanked population. We will soon be deploying our Point-of-Sale (POS) network, which will form the basis for our agency banking rollout. We are also deploying other card-based products to reach this segment of the market and hopefully bring banking closer to them in their communities.
Do you think your history gives you an advantage to reach the indigenous or unbanked population?
Yes. Everyone believes that GCB has an important role to play in this economy because of its size and large distribution network, and the fact that it is a local bank. We are present in all regional capitals and towns so we are very visible in all communities. We recently launched our credit scored personal loan product, which is doing very well. These are very small loans averaging $2,000, which our customers can now access within 24 hours. It really amazing how one can touch people’s lives at that level with those small loans. It is akin to doing a Corporate Social Responsibility project.
The bank has really transformed and you have become a formidable competitor in the market.
I’d rather say we are transforming because there is still some way to go to deliver the new GCB. We want to compete with the rest and not to be perceived as a government bank always ready to be given handouts by our owners. That is an image we want to shed. This means getting the right technology, improving customer service, investing in our people and attracting talent. That said we are proud of our heritage because it offers us a unique advantage in terms of business opportunities.
What are the bank’s competitive advantages?
We have a solid local franchise that everyone identifies with in the market. We have the biggest balance sheet and the widest distribution network. We also have the largest customer base and in terms of technology I believe we are one of the best in the market.
This report is being distributed to a German audience primarily. But let’s not forget that there is a large diaspora outside of Ghana and all over the world. The bank here has a product – the Link2Home programme for the diaspora coming back here. Could you elaborate on that and the potential opportunities that this programme can offer?
The product was designed based on customer feedback. Ultimately, a lot of Ghanaians living abroad will want to come back. So far the Link2Home product is doing well, so we have flows from non-resident Ghanaians coming through which improves our liquidity and diversifies our funding sources.
I would like to talk about CSR initiatives. What do you believe about direct CSR initiatives?
If I got your question right, we really want to make a real contribution to society. We want to affect society positively by investing in the community in which we live and work. So we invest in education and healthcare because we believe that a healthy and educated nation is essential for the growth of our business and the economy at large. We have been supporting the building of community schools, invested in medical facilities and water and sanitation projects.
There is always going to be a degree of scepticism amongst foreign investors. What would you tell investors who doubt the credentials of this market and the region?
They shouldn’t continue to wait for too long because Africa is the last frontier and one of the few investment destinations where you can earn double digit returns on your investment. Risks are not really commensurate with the returns that investors earn in this market. I think risk officers need to re-calibrate their models for Africa, lower the risk hurdles to give the right signals to investors. I have been around for quite some time and have seen the market through cycles and can say that Ghana is one of the best investment destinations in Africa.
As Commercial Bank was the first bank in Ghana, what does leading this bank mean for you?
I am privileged to lead GCB through its transformation journey to become a respected regional player. When I left my former employers to join GCB, a bank perceived as state-owned and punching below its weight, many thought I made the wrong decision. So many people were concerned about whether I could handle the perceived influence from the state. Two years on, I feel I would have taken the same decision with hindsight. Today, I feel vindicated because we have others joining from Barclays, Citibank, Ecobank and other leaving high role profile roles abroad to join the bank. They recognise the potential and want to contribute to building a formidable bank that will drive this economy to the next level.
We had major challenges dealing with change in the first two years and I think 2011 was indeed the most difficult year. I am happy with the strides that we have made towards building an enduring institution. GCB started expanding to other geographies so many years ago but it had to abandon the programme because its foundation was not strong enough to sustain its geographic expansion strategy. We are fixing the fundamentals, going back to basics, addressing the challenges in our home market after which we will re-launch our internationalisation plan.
We want to be back in Africa and be recognised as one of the best.
PROJECT TEAM: Alana Kalin, Geoffrey Cooke, Leeni Ojaniemi and Vanessa Massimini
Western Africa, bordering the Gulf of Guinea, between Cote d'Ivoire and Togo
total: 238,533 sq km
country comparison to the world: 82
land: 227,533 sq km
water: 11,000 sq km
DISPUTES - international:
Ghana struggles to accommodate returning nationals who worked in the cocoa plantations and escaped fighting in Cote d'Ivoire
GDP - composition by sector:
services: 51.4% (2010 est.)
AGRICULTURE - products:
cocoa, rice, cassava (tapioca), peanuts, corn, shea nuts, bananas; timber
mining, lumbering, light manufacturing, aluminum smelting, food processing, cement, small commercial ship building
$7.552 billion (2010 est.)
country comparison to the world: 97
$5.84 billion (2009 est.)
EXPORTS - commodities:
gold, cocoa, timber, tuna, bauxite, aluminum, manganese ore, diamonds, horticulture
EXPORTS - partners:
Netherlands 13.2%, UK 7.7%, France 5.8%, Ukraine 5.7% (2009)