The private sector, upon the introduction of the new capital requirement for banks, has not been getting the attention of banks, chairman of AGI Construction sector, Rockson Dogbegah has said.
He attributed this to anxiety in the system.
The Monetary Policy Committee (MPC) release, in May, shows that private sector credit extension, though recovering, remains subpar due to on-going balance sheet restructuring by banks.
As a result, growth in credit to the private sector was 5.6 percent year-on-year in April 2018, sharply contrasting with 16.1 percent a year earlier.
In real terms, private sector credit contracted by 3.6 percent in April 2018 against 2.6 percent growth in the same period of 2017.
In an interview with Goldstreet Business Newspaper, Dogbegah said “it is difficult to get their attention; some banks keep changing their board meetings every time to the extent that credit applications have to be waiting for their attention.”
Dogbegah said the management of the banks move from one meeting to another; from one sourcing of funds to the other; from one strategic meeting to the other, to the neglect of the regular running of the business.
“Whilst the central government is attempting to get them to enhance their capital base; this whole agenda of capitalization is not making the management team of banks concentrate on normal banking business.”
This notwithstanding, the latest credit conditions survey showed an overall net easing in banks’ credit position on loans to both households and enterprises.
Following the collapse of UT and Capital Banks, the Bank of Ghana announced a new capital requirement of GHS 400 million for banks in September 2017, to be met by all banks by the end of 2018.
This sent chills down the spines among players in the financial industry.
Regarding the construction sector, Dogbegah explained that banks are very cautious, especially with contractors working on government projects.
This is due to the notion that government has been known for notoriously delaying payment for work done.
Generally, all the contractors working for the government sector, in particular, have a big concern regarding delays in payment.
“From the previous government to the present, the payment regime has not been very good.”
“Most contractors are now shying from working with government and indeed the banks themselves are not interested in doing proper business with contractors working on government projects,” Dogbegah stated.