Nigerian banks, others in Ghana get Dec. deadline to recapitalise
By Enitar Ugwu and Wole Shadare
FIVE years after Nigerian banks recapitalised, their subsidiaries in Ghana have been given up to December 31, 2009 to raise their capital bases.
Although their parent bodies in Nigeria recapitalised up to the tune of N25 billion, the Ghanaian government has fixed their new minimum equities at N9 billion ($60 million).
The new order in Ghana affects all foreign banks in the country but their local counterparts have December 31, 2010 to recapitalise.
Some of the Nigerian banks in Ghana are Zenith Bank, United Bank for Africa (UBA), Intercontinental Bank and Guarantee Trust Bank (GTB).
At a press conference yesterday at the Presidential Wing of the Murtala Muhammed International Airport, Ikeja, Lagos, Ghana's Minister of Trade and Industry, Mrs. Hannah Tetteh, who spoke on the planned exercise, said media reports of alleged face-off between the two countries were untrue.
Governor of the Bank of Ghana, Dr. Paul Acquah, recently stated that his organisation was working on the recapitalisation modalities.
In November last year, Ghana's Central Bank announced plans of increasing the minimum capital base of the banks and directed banks and other financial institutions to submit their capitalisation plans.
But yesterday, the minister said the government's action would strengthen the sector, adding that it became necessary as the country prepares to be recognised as an oil-producing nation by 2010, which requires a strong financial system.
Tetteh said: "The new financial base is not a punitive measure but a step to ensure that the banks are fully prepared for what is to come. If they don't have a settled financial system, it will be impossible for them to handle the businesses coming in."
She further said the reason for the disparity of dates between the local and foreign banks was to give the indigenous banks the protection they require.
On the alleged mistreatment of Nigerian traders in Ghana, Tetteh said most Ghanaians were unhappy because they feel that the kind of advantages given to Nigerians in Ghana were not reciprocal by the Federal Government.
According to her, despite the Economic Community of West African States (ECOWAS) Trade Liberalisation Scheme (ELTS), Nigeria had not been open-ended as it had created restrictions for Ghanaian goods.
"The reason we are getting this kind of reaction is because we have opened, aside of trading, we have opened our economy to Nigerian businesses. At present, we have four Nigerian banks in Ghana, we have a Nigerian computer assembling company in Ghana, Omatek. We have five Nigerian airlines flying two times daily to Ghana, and we have Nigerian furniture manufacturing company in Ghana.
"The reason why there is this resentment, and I use this word advisorily, is because Ghanaians don't find the same opportunities in Nigeria. Nigerian goods are imported to Ghana apart from oil duty-free; Ghanaian goods on the other hand, find it difficult to enter Nigeria because you have a prohibition list.
"We are looking at all these because the government of Ghana is willing to make the relationship work," she said.
Tetteh said most of the businesses reserved for Ghanaians at the lower level had been encroached upon by Nigerians and other foreigners and this had led to friction in the economic relationship "but this can be addressed."
She continued: "Under the laws of Ghana, trading is an area of economic activity for Ghanaians, so under the Ghana Investment Promotion Centre Act, which has been on for 17 years, if you want to trade in Ghana as a foreigner, you must start your business with a minimum capital of $350,000 and you must register with the GIPC and if you have failed to do that, then under our municipal law, you do not qualify to trade in Ghana.
"And the reason why we have done that is that we want to reserve stores, kiosks for Ghanaian nationals and we wanted foreigners to invest in departmental stores because we felt that is where the value will be in our economy.
"Because of ECOWAS, we put some alternate agreements of which we will aid Nigerian traders. In other words, what we said was that if a Nigerian trader could not have the stated capital of $350,000, he would combine and incorporate a company that would reach that minimum capital, register with the GIPC and then be licensed to operate as traders. That is not strictly in compliance with our legislation.
"Under the joint venture, if you want to do a business with a Ghanaian you will need a minimum of $10,000 and foreign-owned manufacturing, advertising and so on is $50,000," she said.
In Nigeria, a new appraisal system being adopted by most banks has heightened fears of job loss in the industry.
The first major appraisal of this year, which comes up in June, sources in some banks, claimed could sweep away some jobs due to alleged poor performance.
The Guardian learnt that the assessments, which are also done on monthly, half-yearly and every two years have rattled the workers, whose previous appraisals are adjudged poor because they did not meet deposit mobilisation target.
Before now, a bank employee could only lose his/her job after performing below average for two years. But in the current dispensation, allegedly prompted by the present global financial crunch, most banks, which have been looking for opportunities to downsize, now see the appraisal scheme as a better way to achieve the goal.
In fact, some banks now place emphasis on the half-yearly appraisal than the two-yearly method. For the current year, they have already hinted their workers that the big stick would be wielded on anyone who perform poorly consistently for the period under review.
Since the system was adopted, those who have consistently performed poorly for three months have been reprimanded and given a three-month grace to improve.
After the period and there is no improvement, such workers are disengaged as against the old practice of non-performance for a two-year period.
Some banks' employees, who spoke with The Guardian, expressed fear that the practice could lead to more job losses as the performance indices were largely based on deposit mobilisation.
They also feared that with the current state of the economy, mobilising deposits had become an uphill task.
Early this month, The Guardian exclusively reported that tough days lurk ahead for banks' employees, who fail to meet the deposit targets set for them by their employers, as they may henceforth forfeit part of their pay.
Some banks were reported to have structured their workers' pay on the scale of 20 per cent variable payment while others opted for 50 per cent.
This means that of the 100 per cent monthly pay package of an employee, 20 per cent is dependent on successful delivery of the workers' monthly deposit target. If a worker fails to deliver the target, he or she forfeits 20 per cent of the salary for that month.
The same goes for those operating the 50 per cent variable payment system, that is 50 per cent of the staff's salary is guaranteed, while the other 50 per cent is dependent on target delivery.
