It costs a bank in Ghana not less than $3m to set up a branch – Head of Agency Banking at Ecobank

For a bank to establish a branch anywhere in Ghana, it will require not less than 3million dollars to do that, Head of Agency Banking at Ecobank, Mr Gary Armah, has said.

For Automated Teller Machines (ATMs), he said, it costs between Forty to Fifty Five Thousand dollars to set up a single ATM.

Speaking to journalists on the sidelines of a two-day workshop held for members of the Journalists for Business Advocacy (JBA) and sponsored by Ecobank, in Accra which started on Thursday April 28, Mr Armah indicated that due to the high cost involved in establishing branches, Ecobank is heavily relying on the agency banking to get its services spread across the country.

“As I explained earlier, for a bank, in terms of cost, the average cost of setting up a branch, adding up everything together including staff cost or the the little cost involved over time and everything, roughly it will cost you about 3million dollars.

“For you to have an ATM in an obscure area, if you manage to set up all the things that you need in order to work with, you are looking at about 40 to 55,000 dollars in that respect.

“So, for us at Ecobank, our approach in doing this agency business is to first of all, try and get the unbanked, the underbanked and also to bring convenience to our already banked. One of the easiest approaches for us, in terms of spreading across the country and then reducing the cost of establishing branches is to use the agency system,” he said.

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He added “It helps us to go into to the hinterlands where on the normal we cannot set up branches due to the cost and business feasibilities that we do and see that we might not be able to recoup the cost we put in there. The best option for us to partner third parties to do some of these transactions for us.

“It also helps educating the people in these areas, bringing convenience to their door step, bridging the knowledge gap in their financial transactions, understanding the services available as well as getting to them to be within that space where they get to add on directly to the economy in supporting this country.”

During the event, the First Deputy Governor at the Bank of Ghana (BoG) Dr Maxwell Opoku-Afari said in a statement which was read on his behalf by Dr Phillip Abradu-Otoo, Director of Research at the BoG that Ghana’s economy has rebounded strongly from the pandemic, as evidenced by the national accounts data recently released by the Ghana Statistical Service (GSS).

He explained that the overall real Gross Domestic Product (GDP) growth was 5.4 percent in 2021, higher than the targeted 4.4 per cent. Non-oil GDP growth was 6.3 per cent.

These developments, he said, point to a robust economy that is pushing toward its pre-pandemic level, though downside risks remain, including potential outbreak of new variants of the Covid-19 pandemic and further headwinds from the Russia-Ukraine war.

“Headline inflation has shifted above the upper band of the medium-term target, driven mainly by food prices, upward adjustments in ex-pump petroleum prices, transport costs, and passthrough of exchange rate depreciation.

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“The latest data shows that headline inflation rose sharply to 19.4 per cent in March 2022 from 15.7 percent in February on the back of significant increase in food inflation. In addition to these trends, there are significant upside risks to the inflation outlook, including increased commodity prices, particularly crude oil, and intensified supply disruptions. The Bank’s forecast indicates that inflation would trend back towards the medium-term horizon over the next four quarters.

“The remarkable resilience exhibited by the banking sector over the two-year period could be attributed to the comprehensive financial sector reforms that took place before the Covid-19 pandemic struck in 2020. The sector continues to remain liquid, profitable, and well capitalised. The industry’s measure of solvency, the Capital Adequacy Ratio, has remained well above the revised regulatory 13 percent prudential limit. Asset quality, however, declined marginally,” he said.

By Laud Nartey||Ghana


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