Regional Dominance of Liberia’s Banking Sector Limits Options

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VICE PRESIDENT JOSEPH BOAKAI, visiting Nigeria last week expressed appreciation for the stabilising role Liberia’s next-door has and continues to play in ensuring peace and made a specific note that most of the banks as well as insurance firms in their country are owned by Nigerians.

THIS IS NO SECRET. Liberia’s banking sector is dominated by regional banks, mostly Nigerian-operated UBA, GT Bank, Global, Afriland of Cameroun and the most recent, GN Bank from Ghana.

IN NEXT DOOR Ghana Nigeria, Western Banks like Standard Charter, Barclays, Fidelity, Stanbic and City Bank are making inroads in markets that are far from perfect but aptly suited to meet the needs of the local economies in those countries.

IN CONTRAST, LIBERIA WITH A POPULATION of a little over four million have become all too reliant in regional banks that are in most instances failing to meet the demands of a small market amid repeated complaints of poor customer service.

CONSUMERS routinely run into trouble with ATMs that are often short of cash or forced to deal with long lines as consumers are often told that “the system is down”.

TODAY, AT LEAST eight commercial banks with branches across the country operate in Liberia under very turbulent conditions that include risks stemming from high non-performing loans and low profitability in an environment that remains capitalized and liquid.

LIBERIA WILL FOREVER remain indebted to its regional neighbours for the roles they played in helping Liberia recovered from a protracted civil war. But the banking sector has been experiencing immense setbacks in particular due to the lack of diversity in ownership of the banking sector

MOST REGIONAL BANKS operating in the country have very weak control systems which contributes to high thefts, mostly internal and a slew of bank robberies, a situation rarely seen in western-operated banks in countries in the region with far more rigid control systems.

AS A RESULT, bank thefts and robberies are at an all-time high.

EARLIER THIS MONTH, for example, officers of the Liberia National Police (LNP) were forced to secured the premises of Ecobank-Liberia Limited in Kakata, Margibi County, after the bank came under attack by 10 armed men around 12:30 in the morning. The robbers reportedly armed with single barrel guns and other deadly weapons, fired on Police officers who returned fire on the attackers.

SIMILARLY, IN 2012, First International Bank or FIBank, was hit with a theft of US$1.2M.

THE UNITED BANK OF AFRICA (UBA) took three men to court for allegedly conspiring with a former bank employee to steal US$30,000.

IN THE SAME YEAR, The Management of Ecobank-Liberia disclosed that it was experiencing operational losses which remain a challenge.

THE LOSSES WERE attributed to the constant armed robbery and burglary attacks.

THIS IS WHY WE feel strongly that the Central Bank of Liberia should muster the courage and put in place workable control systems that will curb the number of thefts, robberies and internal stealing taking place at these banks.

PERHAPS IF ONE OR TWO western banks are encouraged to enter the market with tighter financial control systems; the flood of regional banks will shape up and begin to take their control systems a lot more serious than they have been.

THEIR SOLUTION of brining in their own managers from Nigeria and Ghana owing to suggestions that Liberians cannot be trusted, signals that Liberia will continue to struggle with a problematic banking sector that is in dire straits and badly in need of resuscitation.

A LOT OF THE BANKS fail to follow their own regulations and as a result run very weak systems that is continuing to offer little to the consumers who are trapped in a sea with limited options of diversity at their disposal.

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