Banks brain of the economy, says Governor Colley

Gambia’s Central Bank Governor Amadou Colley has metaphorised banks as brain of the economy, saying they are extraordinary institutions not only “for what they do, but also for what they can do”.

“Banks are the brain of the economy. They allocate resources to where they are productively and better utilised than any central planner ever could,” the bank governor said while delivering a keynote address at the 65th Ordinary Meeting of the Executive Council of the West African Bankers’ Association (WABA) held yesterday at the Kairaba Beach Hotel in Senegambia.

The one-day WABA meeting brought together senior bank executives from across the sub-region to discuss pertinent issues about the role of financial intermediaries in West Africa and how they could augment their services and products to people of the region.

Banks mobilize and pool savings, produce information on possible investments so that resources can be channeled to their most productive use, monitor the use of funds, facilitate trading and ease the exchange of goods and services, Governor Colley continued his address, saying: “Simply put, we cannot do without banks.

He added: “Given that banks are the centre of economic and financial activity and are key to monetary policy implementation, banks have a unique and fiduciary responsibility to provide safety and a reasonable return to depositors.

“Put differently, banks have a responsibility to work for the economy and by so doing reap the benefits of a stronger GDP growth in a virtuous cycle.”

Under the auspices of the West African Monetary Zone (WAMZ), the CBG governor stated, Member States are committed to integrate the region’s financial systems.

“We salute the critical role WABA is playing in this endeavour and the efforts to build upon the success achieved so far,” he added.

As key providers of financial services in the sub-region, banks have crucial role to play in ensuring a robust and efficient payments and settlement systems.

Unfortunately, the governor noted, transactions continue to be predominantly cash. 

He added: “Besides, the limited electronic transfers between our countries pass through correspondent banks located thousands of miles away from our territories.”

He highlighted the inkling he had got about WABA considering a project to integrate settlement through the West African Clearing House.  “This is commendable and we look forward to receiving concrete and practical proposals on the project,” he said.

Veering into the Gambian banking system, Hon Colley stated that the system had undergone rapid development  over the past fourteen years, with the number of banks increasing from only 5 in 2000 to 12 in 2014, as well as assets, deposit liabilities and private sector credit as a  percentage of GDP rising “significantly”.

“The Central Bank of The Gambia is unreservedly committed to further deepening of the banking sector by, inter alia, adhering to the precepts of sound economic management to ensure sustained macroeconomic stability and development of the financial infrastructure,” the CBG Governor said.

In his remarks on the occasion, Pa Macoumba Njie, president of the Gambia Bankers Association (GBA), the host institution of the event, says WABA fosters the exchange of ideas and experiences in the banking and monetary fields mainly by organizing seminars, conferences and short courses for promoting consultation among banks on themes that are relevant for development and strengthening of the West African Banking Sector.

“I believe it is in line with strengthening the financial sector that these objectives were formulated so that we, in the region, would jointly and severally have stronger financial institutions, which is necessary to foster development,” Mr Njie, who is also the managing director of Trust Bank Gambia Ltd, said.

“As part of its ongoing activities,” he also stated, “I noted with satisfaction that WABA is undertaking the issue of the cross border payment system which would have a tremendous effect on intra-regional trade in the sub-region.

“I am happy to be part of this meeting to gain further insight into this development. We, who make up the Banks in The Gambia, are also happy with the platform that WABA provides for us to collaborate to create healthy competition.”

WABA, created by the Governors of the Central Banks of West African states 33 years ago, would present the cross border payments system project to the Committee of Governors for adoption in its next meeting, said WABA president Eddy Ogbogu.

“It is appropriate to mention that at the next meeting of the committee of Governors slated at the later part of this month in Dakar, Senegal, the Cross border Payments System project which has been jointly developed by WABA and the ECOWAS Commission would be presented to the Committee of Governors for adoption,” the WABA president disclosed.

“Let us use our platform as an association to forge a common understanding and framework around issues of commonality to our members and in the drive towards the financial integration of the sub-region,” Mr Ogbogu told bank executives.