EXPORTING GHANA’S BANKING, EDUCATION AND HEALTH SERVICES:

A paradigm shift in export strategy and the legacy of a president

Submitted by:

Nana Owusu Ansa

P. O. Box OS 1854, Osu, Accra

1.0  INTRODUCTION

Ghana has experienced significant economic growth during the past six years as evidenced by the selected economic indicators below. The country has never experienced such continuous economic growth since it attained independence some fifty years ago.

       Selected Economic Indicators 2001-2004

Sources: - 1 Ghana Statistical Service    2.  Budget Statements 

These achievements notwithstanding, there are major weaknesses in the economy which could prevent the country from achieving its goal of becoming a middle income country with per capita income of US$1000 per annum by 2015. One of such weaknesses is the persistent deficits in the country’s balance of payments, a problem usually ameliorated by foreign donors’ support or in recent times through remittances by Ghanaians in the diaspora. Ghana’s imports/exports in 2006 were US$3726.67million and US$ 6.6753.68million respectively, while private inward transfers through the banks and finance companies totaled US$5.78 billion.  

It is the firm belief of the author that the gaps in the country’s negative balance of payments can be eradicated and that Ghana can achieve annual growth rates of 8% or more and become the “African Eagle” that it should be if the government and other stakeholders of the economy  would dare and take bold decisions; one of which should be the EXPORT OF THREE (3) MAJOR SECTORS OF THE ECONOMY: BANKING, EDUCATION and HEALTH SERVICES. 

Less than 40% of the funds government has earmarked to support exports are utilized because the country’s export strategy has focused mainly on exports of goods.  Exporting the country’s Banking, Education and Health Services would require a paradigm shift in export focus, strategy and financing. This article focuses on Banking Services, the second and third articles will discuss Education and Health services respectively. 

2.0  GHANA’S BANKING SERVICES 

 For the purposes of this article “Ghana’s Banking Services” refers to a Consortium comprising state-owned banks, banks with majority of shares owned by the state of Ghana, Ghanaian-owned banks or non-bank financial institutions, banks and other bank financial institutions with majority of shares owned by Ghanaians, rural banks, local Ghanaian investors, Ghanaians in the Diaspora, Apex Rural Bank and the Bank of Ghana. 

     A consortium of ‘Ghanaian banks’ is proposed because no single Ghanaian –owned bank or financial institution can compete effectively in the highly competitive global financial market.  And the consortium could also serve as a first step in merging some Ghanaian banks to ensure an equally effective competition at home. 

3.0  THE CASE FOR EXPORTING GHANA’S BANKING SERVICES

Services represent the fastest growing sector of the global economy; accounting for two-thirds of global output; 1/3 of global employment and 20% of global trade.  While world trade has grown phenomenally during the past 50 years – from US$80 billion in 1953 to US$8 trillion in 2004 – Africa’s (including Ghana’s) share has declined because the latter has been selling mainly commodities and semi manufactures while the developed countries have experienced significant growth in services trade.

The jobs of the future, the rapid growth of the economy, and the route to the country’s    middle income stratus by 2015 lie mainly in the expansion, growth and export of the country’s services- Banking, Education, Health, Transportation, ICT etc.

Studies have confirmed the a priori reasoning that major exporting countries have either initially exported their banking services and consequently made it easier for their non-banking exporters by “pulling” them to countries where their international banking services are located, or facilitated non-banking exports by following or “pushing” these exporters.  Ghana’s export financing strategy has been based only on the latter   approach and this has led to slow export growth over the years. Faster and higher export growth rates require a combination of both the “push” and “pull” approaches

A Ghanaian-owned multinational bank (GMB) owned by the Consortium as defined in 2.0 above with branches in locations with large concentrations of Ghanaians in the Diaspora – New York, Chicago, Washington DC, Los Angeles, Toronto, Hamburg, Amsterdam, Rome, Lome, Lagos etc – over a period of time would offer the following benefits to Ghana and in the process accelerate the achievement of the country’s middle income status by 2015.

      The ECOBANK Group’s success story – “6000 employees across 305 branches and offices throughout the continent………;” in 2006 the Group’s balance sheet grew by 59 percent to US$3.5 billion while gross revenues before interest expense increased by 47 percent, to US$419million.  Profit before tax jumped by 70 percent to US$129.3million- “Ecobank Group CEO Arnold Ekpe, “Daily Graphic” April 13, 2007 issue; -  a success story which should have been Ghana Commercial Bank’s if a past government had not allowed political/personal expediency to override Ghana’s economic interest, should give us an idea of what a GMB could be.  Ironically ECOBANK started operations in 1988 with Ecobank Togo, just when Ghana had started dismantling Ghana Commercial Bank Togo.

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