Economic crisis hits bank deposits

The country’s deepening economic crisis is impacting negatively on the ability of Ghanaians to save. Many people are now concerned with surviving the moment rather than long-term planning. The Finder’s investigations have revealed that the queues associated with banking halls have reduced drastically.

People only go to banks to withdraw money, rather than to save. The investigations, which were conducted over the months of May and June, involved 12 banks across the country. A cross-section of people told The Finder that their earnings hardly last for two weeks, citing persistent increase in the prices of goods and services as the main reason for their predicament.

The respondents, made up of private and public sector workers, said they only go to the banks to withdraw money when their salaries are paid. “These days, we have to withdraw all money to enable us buy foodstuffs and other essential items as the continuous depreciation of the cedi affects prices,” one customer told The Finder.

Some banking officials told The Finder that deposits have dropped by about 40% in the last few months. The bankers told The Finder that banking halls now only experience long queues during the end of the month when people rush to withdraw their salaries. They explained that many Ghanaians have reduced their savings while others have completely wiped out their savings due to increasing financial pressures.

“The government thinks it can get blood from a stone, but if you squeeze a stone too hard you will eventually smash it to pieces,” one banker said. “Anything people have had saved up is being completely eroded away,” another banker said. The bankers expressed fear that if the current situation should continue to the end of the year, it may pose liquidity challenges for the banks.

The nurturing of a savings culture would serve as the basis for individual capital mobilisation for accelerated growth and development. The banks are, however, striving to effectively manage the little savings in order to grant loans to customers.

Already, the proliferation of the Non-Bank Financial Institutions (NBFIs) has taken financial intermediation closer to the ordinary Ghanaian and thus taking advantage of cheap deposit, which is currently making it difficult for commercial banks to rake in cheap deposits. Consequently, commercial banks embarked on aggressive promotions as a marketing strategy to attract customers and to absorb the lost deposit since the MFIs do not have enough resources to embark on similar promotions.

For example, HFC Homesave Promotion, which is aimed at rewarding loyal customers with their homes, offers the public the opportunity to cultivate and develop a good savings habit, with the possibility of owning a home, by depositing a minimum of GH¢200 in their HFC Homesave, Smartsave, Life Starter and Current Accounts.

This is expected to grow and maintain an average balance of GH¢1,200 for three months. Also, Access Bank’s Easy Access Promo is another deposit type with the campaign of rewarding loyal customers of the bank, and seeks to deepen the saving culture in Ghana by empowering individuals to save, own and operate their own accounts.

Customers must deposit GH?200 in their account to qualify for any of the draws, or maintain a minimum of GH?500 or more in their accounts. CAL Bank’s promotion required customers to deposit multiples of GH¢300 and maintain a balance of GH¢1,500 for 30 days before qualifying.

UniBank’s Dream and Drive Aseda Nkoaa Promotion was no different, with customers qualifying after depositing a minimum of GH¢200 at any uniBank branch in the country. All theses promotional activities to drive deposits mobilisation abound on the market as part of moves by the banks to compete with non-bank financial institutions who promise high interest on deposits.

However, it seems the current financial crisis has rendered such promotions useless following the reported drop in savings. Therefore, the current trend of dwindling deposits being experienced by the commercial banks threatens the economy.