| The
Proposed AUGEIP-eBank
Global Network - We
starve to serve Africa and the global markets rather than
serving a narrow and restricted vision which hasn't gotten
the African continent nowhere.
High
inflation due to the huge African member states'
workforces has attributed the high inflation figures in the
African Union member states to the huge composition of
government which forces it not to live within its means.
Funds must be made available
to foster local, national and regional entrepreneur develop.
The cost of borrowing in commercial banks, where this option
exist, are favourable for the private sector in Africa.
Lacks short term loan to support entrepreneurs. The
continent is seeing the capital base eaten up which makes it
difficult for the African entrepreneurs to develop.
The African economy is sick
and if it is to recover there is need for member states
governments to cut their spending, reduce borrowing from
banks to pave way for the private sector and implement a
tight monetary system.
African countries which
account for most of the most underdeveloped countries in the
world are being marginalized during the globalisation
process and this should be changed. While we may have
different views on how best we can make Africa a net
beneficiary of the process, the fact that we can meet on
this platform and interact is testament to that end.
High taxes kills production.
In most African member states, there are pressure by
government to raise funding and its key source is tax.
Unless taxes are production oriented, we won't see the
results. In Africa and elsewhere, the Value Added Tax at
17.5 is too high. The size of the government in most African
countries is big and cannot live within its means. Tax rate
in these countries is higher than is obtaining in rich
nations. There is a serious policy failure in this area to
address. Interest rates of about 50 per cent will not help
develop these countries. Thus, AU member states governments
need to address this by looking at incentives and tax
reformation -
Lapses in
banking industry in African member states:
- Needless low profile and
subservience of the chairmen and national directors on the
banks' boards throughout the African continent.
- Lack of capacity in the
Central Banks of AU member states to institute genuine
competition, improvement in customer relations and
monitoring their performance in these aspects of their
operations.
- The failure by the social
and economic development ministries in Cabinet to push
through relevant ideas which the local banks should adopt
and if necessary provide relevant legislation.
- The essence of any
understanding of their full responsibilities by the member
states' Competition Commission (if existing at all)
and the consumer protection group (if existing at all).
- The failure by the
parliamentary selects committees (if existing at all) to
take interest in the operations of commercial banks.
- Collusion in the banks
associations (if existing at all) to adopt some practices by
the members throughout the African continent.
- Information to customers
very scanty from banks.
- Current Account - All
banks seem to say that there is no minimum balance on
current accounts (in national currency) but one needs to
earn a minimum monthly income in order to be allowed to open
an account. Presumably a person who can get interest earned
from say Government bonds, treasury bills, dividends, etc.
and whose withdrawals will balance at the end of a given
time, would have to negotiate with the bank manager. The
effort to open discussions obviously would discourage such a
person from attempting to open a current account.
- Cheque Clearing - Here it
seems the information technology has not yet reached the
banking sector as can be shown by the following from one of
the bank brochure:
National
accounts:
-
In house cheques - 24
hours
-
Within the same clearing
area - 3 business days
-
Between banks in
provincial centres - 6 business days
-
Between provincial
clearing centres - 10 business days, other banks say 21
business days.
Foreign
accounts (cheque draw in):
-
Banks within same area
(whereas this service exists) - 6 business days
-
Banks outside country -
minimum 21business days
-
Minimum
balances - savings accounts: equivalent of at least
US $ 1000.00
-
There are
penalties for insufficient operations of these accounts,
e.g. less than so many withdrawals per month, or falling
below the minimum for one day -
- The
foregoing is a tiny indication of the suspicion that some
collision is afoot and that there are really no concerns for
the conditions in the African economy nor for the need to
popularise banking. The lack of concern shows itself in the
following ways:
-
Long
queues and waiting to cash a cheque even if not written
by somebody else
-
The
failure to clear the cheque promptly unless either one
raises dust or is brave enough to see the manager. It is
admitted that there is need to prevent fraud but this
occurs everywhere else in the world.
The information technology abroad means that one can cash a
cheque in London on an account in Plymouth or Aberdeen
within one minute of presenting it to the cashier. The same
applies in Australia, much of Europe in the euro area and
the Far East.
- As for the minimum balances
and operations of accounts the conclusion is that with these
deposits on which no interest is paid, the banks are making
a killing. We can go on to show how iniquitous tha banks are
but also how many of those in the cash economy have been cut
off and, effectively to them, the banking system is irrelevant.
- The permanent uncontrolled
borrowing by Government from the banks though bonds,
treasury bills, now taxing interest savings means that most
African people will keep their money out of the banks and
will pay their bills in cash - not by cheque.
We can now
examine the underlying causes:
- The
banks chairmen and Directors, do not personally queue up to
cash their cheques or the are afraid to raise these awkward
concerns in case they lose their positions on the boards.
- In most
African countries, the central Board does not have senior,
experienced commercial bankers who can point out to the
commercial bank managers what must be done even on bank
closures, proportions to commerce and industry for
sustaining the economy and customer interest maintenance and
expansion.
- The Cabinet
as a whole, lacks any understanding that it has collectively
to prod those in banking to play their part in the entire
economy, not just traders or foreign owned enterprises.
- The
Competition Commission and the consumer protection lobbies
(where they operate) appear to be unaware of their prime
responsibilities.
- The parliamentary
selects committees (if existing at all) do not exchange with
the various watchdog committees of parliament to come up
with public Competition and Fair trading Acts.
- The Competition Commission
instead of investigating the the activities of the Bankers
Associations in breaches of the Competition and Fair
trading Acts prefers seminars and travel.
- The ministries which should
have consumer interest in their portfolios include for the
general part, Finance, Labour and Social Services, Community
Development, Tourism and of course trade, Commerce and
Industry.
In view of the above, this
Proposed AU Commission in Regional
and Global Economy Integration has proposed instead new
policy and strategy geared to linking Virtual Financial
Services to Traditional Banking Services in Africa. The
following interim and comprehensive global
AUGEIP-eBank Network is proposed for
implementation review by all stakeholders, AU communities
and member Sates.
|
