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Gambian Banking and its Discontents: The Need for Corrective Action

May 20, 2015, 11:44 AM

I am not Sanusi Lamido Sanusi, the former Nigerian Central Bank Governor and current Emir of Kano; but I too have a strong passion for banking rectitude. Banks form the lifeblood of any country’s economic system and hence their impact on socio-economic development could be overwhelming. Therefore for economic development to be achieved and sustained, banks need to be credible, honest and responsive to the micro and macro needs of their economic milieu. This is why I feel disappointed, even angry at the behavior of some of our banks.

We have seen banks take public funds in this country, deprived the poor people of negligible amounts for personal loans and then loan out these same poor people’s deposits to ‘rich’ individuals; then the borrowers waste these funds instead of investing them into the economy, and then default. So after accumulating the deposits of poor people, a bank lends these funds to rich people without recourse to due process and then when these banks fail, Government has to step in with public funds to rescue them!

As if the above issues are not enough of an abomination, some of our banks have of late turned themselves into foreign exchange bureaus. I am all for free market economics with flexible exchange rates and I do believe that Governments are better off limiting themselves to creating conducive situations for private enterprises to thrive. But in a situation where your banking system is not responsive to the needs of the economy (macro and micro); accompanied by market failures, then Government intervention becomes a necessary alternative, albeit not ideal.

Summer time is almost invariably a trough period if you take even a casual glimpse at our domestic economic cycle. So naturally our exchange rate should be expected to depreciate around this time of the year especially given crop failure, and Ebola-engendered decline in tourism; but speculation is definitely added fuel for our current exchange rate nightmare. The Central Bank of the Gambia is one of the best in the sub-region in terms of regulatory pedigree but the current exchange rate problem and the unbridled proliferation of foreign exchange bureaus makes me question their sense of judgment at least for now. I hope they do not take offence for my late mom teaches me that ‘tonyaa fo e teeri yeh; wo buka terriyaa tinyaa’ (speaking the truth to your friends should not hurt the friendship).

Beyond the macro issues of our domestic banking system, let us take a look at the lack of fair play in the micro matters of some of our banks. Chances are that as you read this essay, you are reminded of unexplained charges on your bank account. I have suffered this too but more often than not, you let it pass because you have too many pressing issues to deal with; or you are sure that nothing will come out of any complaint you may raise with your bank.

Sure, the equation here is messy: you deposit your money with a bank; the bank uses these funds to sit around and drop them into Treasury bills for assured interest and principal re-payments. The bank pays itself fat salaries and bonuses out of your funds and then they scoff at, and pinch, you with glee. I have suffered this for years but this week, I said to myself, enough is enough; I shared the following verses on social media and then charged into the relevant bank’s M.D’s office:

My message to you is basic:

Don’t monkey with my money

Don’t try a Badibunka who is hungry

Only less angry than a Sarahulleh bandit

I am not a coward from Kiang Jali

I roar like a pride of Lions from Serengati

My attack, fierce like the Fulas on the Nyancho Wali

I am Ahmad Moctar, swifter than Muhammed Ali

Treat me fairly and square that’s basic

The above verses were motivated by the fact that even though the bank staff admitted that their action on my account was wrong, they refused to correct their error partly because I had vented my anger on social media. When I finally met this bank’s M.D I was impressed with his sense of professionalism, care and honesty. My problem was finally solved and whereas I had contemplated closing my account at this bank, their M.D’s swift action has made me to change my mind and stay.

In a country whose population is mainly Muslim, wee need to heed Quranic injunction “O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful.”

If banks are the lifeblood of our economic system, then let them inject liquidity into the system rather than rob the system. At the end of the day this universe is justly ordered and whatever you give you get back with economies of scale. Let us bank on trust, mutual understanding, care and respect. That is the only way to sound and sustainable socioeconomic progress.

With due humility and in exercise of my civic duty as a private citizen I appeal for the consideration of the following recommendations:

•           To lift the current peg on the exchange rate

•           To set up what I would call a “Review panel on banking practice and foreign exchange dealings”; and that the outcome of this commission should not be too penal but corrective with a view to check the ills of the system; and to usher in a new era of proactive and benevolent banking practice

•           That a committee comprising Central Bank of the Gambia, Ministry of Finance and Economic Affairs, Bankers’ Association, Association of Foreign Exchange Bureaus, PURA and representatives of consumers oversee the implementation of the recommendations of such a panel

In parting, let me confess that the original title of this essay was more virulent; but after critique of my thesis on social media by bright young Gambians like Omar Mboob and Nyang Njie I toned the essay down a bit. Someone even appealed that I should not publish this essay at all. I factored the genuine critiques into my essay but insisted on publishing it. I know there are potential negative consequences for my release of this essay but I still make bold to publish it. Healthy debate is a necessary condition for human progress. Debate is a great antidote to our national psyche; Let the ‘waxtaan’/’kachaa’ begin!

Author: Momodou Sabally

The Gambia’s Pen

Former Central Bank Economist and National Budget Director, Sabally is the author of several books. The May Edition of New African Magazine features his guest opinion column on the deadly migrant boat disasters at the Mediterranean. He has just started a new blog on Tumblr “Light for African Youth” (LAY): www.tumblr.com/blog/thesabally