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Banks are financial intermediaries that receive deposits from surplus spending units and channel these in a form of loans to finance deficit spending in an economy. The banking activities started in the then Gold Coast during the colonial era with the goal of providing financial services to the British enterprises and the colonial administration. However, in 1896, the Bank of the British West Africa became Standard Chartered Bank Ghana with its first branch in Accra. What is the future of Ghana banking industry? What can we expect from banks in the future?
THE HISTORY OF GROWTH OF GHANA’S BANKING INDUSTRY; Preview to the Future of Ghanaian Banking Sector
The Central Bank of Ghana traces its roots to the Bank of the Gold Coast (BGC), where it was nurtured. It may be recalled that way back in 1947 some leading politicians had called for the establishment of a national bank with central bank functions to act as banker to the government and to cater for the indigenous sector of the economy.
Proposals of the advocates for a central bank were accepted and in early 1955 another Select Committee was set up by the Government to take a new look at the Trevor Report which led to the establishment of Bank of Ghana in 1957 to take control over the management of the country’s currency. Additionally, many public banks and Development Financial Institutions like National Investment Bank, Agricultural Development Bank, Bank for Housing and Construction had also been set up by 1974, to enhance the financial sector by providing services the commercial bank ignored.
The Ghanaian economy in the period 1976-83 experienced severe crises, in addition to poor economic growth and severe balance of payments problems. In 1983 an economic recovery programme was initiated, which sought to restructure the economy and reverse the trends of economic decay. The sharp devaluations of the domestic currency (under the ERP) during 1983-86 made many foreign loans administered by the banks unserviceable. The situation was even more serious for the state-owned banks. The effect of these problems was to erode all the norms for capital adequacy and prudential lending.
This prompted the government to introduce the Financial Sector Adjustment Programme in 1987. This Programme was carried out in three phases across time, namely FINSAP-1 which covered the period 1988–1991; FINSAP-2 for the period 1992–1995; and FINSAP-3 which started in 1995, and it is an […]