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Nigerian Banks May Leave Gambia
Monday, 01 November 2010 12:01
ThisDay - Nigerian banks may be compelled to stop operations in The Gambia as opportunities and revenue thin down,
exacerbated by rising competition and negative impact of the global meltdown. At the end of the 2009 financial year, the country’s banking industry comprising 13 banks recorded total loss of about 45 million Dalasis (about
$1.5million). Ten of the banks declared losses as against three banks with the bottom-line on the positive territory. Managing Director of Guaranty Trust Bank Gambia, Mr Lekan Sanusi, told journalists in The Gambia last weekend that the country could only take a certain number of banks.
He said: “But do we really need as much as 14 banks in a relatively small country like The Gambia? If you divide the number of banks in this country by the population of about 1.7 million, you have an average of 100,000 people per bank. Revenue is going down. What I know is that in the long run, people will count their numbers.
“If you can’t achieve a return on investment in a bank subsidiary in The Gambia as is expected, then the money will return to the home country. At the end of the day, it is return on investment that matters and shareholders will have to ask the bank in Nigeria, why must we continue to lose money in The Gambia?”
The Central Bank of The Gambia, worried that if it continues to declare losses, the banks might lose the confidence of the people, has advised banks to streamline their cost. The apex financial institution has also announced new capital base for banks.
It has also directed banks to increase their minimum equity capital from the current D60 million (about $2 million) to D150 million next year (about $5 million) and to D200 million (about $7 million) by 2012.
The GTBank Gambia boss, who addressed journalists at the Annual Course for Reporters organised by GTBank Nigeria and which ended in that country yesterday, said the new capital base had increased the challenges of banks operating in that country.He stressed that only the creative financial institutions were likely to survive the industry competition and deliver returns commensurate to the expanded capital base.
He disclosed that GTBank Gambia had always taken the first mover advantage in product development and market penetration, which according to him, explained why the bank was the only one in the Gambian banking industry that recorded positive growth in profit before tax in 2009.
A review of the financials of GTBank Gambia showed that the bank was equally affected by the downturn in that country but the management was able to sustain the bank’s financials on the positive territory.
The profit position of GTBank Gambia grew by only D10 million from D60 million to D70 million between 2007 and 2008 and from 2008 to 2009, it increased by D5 million to D75 million. That is against the 100 per cent increase in profit from D14 million to D29 million between 2005 and 2006 as well as equally 100 per cent growth in profit from D29 million to D60 million between 2006 to 2007. A number of Nigerian banks are operating in The Gambia including GTBank, Oceanic Bank, Access Bank, FinBank and BankPHB.
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Comments
My brother, U don’t need to go to school to know that such a political atmosphere IN YOUR GAMBIA U LOVE SO MUCH will never lift a poor nation from poverty. Gambia will never ever develop in such atmosphere. Forget real economy growth and sustainability or banks for now , and educate your people who don’t have the opportunity to see life for real as you are doing in order to be able to choose people who will give them freedom and good life you enjoying in the USA. Then we will be talking about why Gambia ideal government is bailing out banks. For me what you are saying is how to fix wheelbarrow while all your mates are driving cars.
Until you recognise that you are driving a “wheelbarrow”, u cannot be in a position to talk about fixing cars. No offend to you.
This what I expect the debate to be that despite disagreements, we must learn from each other. It is always difficult for one to disagree when the wordings and facts are expressed base on theories and practises.When I was told that Gambia now has 14 banks, the first questioned I asked was where are these banks going to get the money? What creteria did these banks look into to invest in the Gambia despite is a source of employment but is it sustainable? Banks again engaged in promotional activities that only help the competition but not profitable and reliable. My brother there are more questions than answers to sustaining banks in the Gambia which is not political. This is were we need to engage maturely putting politics away and express ideas that will help our economy grow and sustainale. This is the only way we can change public opinion than any time you open the web page, it's identification of problems without coming up with solutions.
Note:
To think that Gambian's are not ambitious business people is wrong.
I recall when I first went to Gambia..word got around that their was this Englishman... Trying to stimulate commerce which was both community and International in its interest.
In 3 days....I had 115 people asking for the chance to explain their business idea..and were looking to me for funding.
I say this to highlight the Gambian's burning business ambition.
Of course some proposals were outrageous.Others risky....but their were a good percentage..that could have worked.
Politically I was supported by the British government and blocked in The Gambia.
Jammeh needs to address this situation.
"Ambition" needs a joint facility
in partnership with government and bankers and an enterprise agency.
Give Jammeh his due:
He has canvassed oversees capital projects that tackle the infrastructual needs..such as roads and power generation and mechanised agriculture attached to abundant skilled farm labour.
But he has not addressed the fundamental imbalance of trade with the rest of the world. This remains stagnant.
The Gambia must invest in job creation and industry..to generate the tax streams to move towards financial sutainability/security
If you keep borrowing to finance capital projects that do not offer long term jobs salaries and industrial expansion...
You will eventually hit a brick wall.
The Banks..should play their part by working with government to fund..small business's.
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