Before January 2011 there were fourteen banks operating in the country, with less than 25% of a bankable population. When the capital requirement was augmented on grounds: that banks are better equipped to withstand period of economic and financial stress and therefore support economic growth; help maintain market confidence in the solvency of the banking system; and impose market discipline and provide a large cushion to protect taxpayers from the quagmire of a bailout process, unexpected capital flight gripped Oceanic bank.
To some extents, the other thirteen banks went on wearing veils of smiles, with the ubiquitous euphoria of grabbing Oceanic’s clients, who have enjoyed the service of that bank since it entered the banking industry.
They did not close down at that, but others, perhaps went on to snatch some of Oceanic bank’s staff, while a pocket of other staff alas felt within the line of redundancy. Oceanic bank’s mysterious saga paradoxically brought respite to the remaining banks, some of which were seemingly bailout by their parent bodies elsewhere on earth.
CENTRAL BANK BUILDING
As the ever-burgeoning financial market enters new revolution, – a revolution of giving back to the people – only a very little number of these banks in the country are exercising the revolution: many of these banks are fattening their ‘Deposits’ back home; leaving the country reeling with domestic debts for the sake of its 1.8 million-population. It is not encouraging to learn that domestic debt alone is consuming 25% of national budget.
Only few banks are fulfilling their Corporate Social Responsibility (CSR), whilst the rest insulate behind in all areas of CSRs. Thus, the need for the Central Bank – the last resort for the banking industry – to question the nitty-gritty of what some of these banks are doing has become necessary.
As a business journalist, I keep abreast of some of the developments that are rolling in my related areas of focus; and I am confident to note that some of the banks in the country are of no use to our people vis-à-vis ploughing back to them.
By calculatingly continuing to stockpile growth and redirecting it to their parent companies without fulfilling a grain of their corporate citizenship in the country they operate, these banks are blatantly abusing the policy of CSR, which functions as a built-in, self-regulating mechanism.
It is part of banks’ responsibility to give back to societies they operate. This is done to embrace responsibility for their actions and encourage a positive impact through their activities.
It is not written in Mandarin to say it is comprehensive to only a few people; but for the past years, only few banks are fulfilling their CSRs: building clinical services; renovating school edifices; saving souls at ‘Save our Soul’; rewarding outstanding customers; sponsoring students; reinvesting in sports etc. The banks that are doing so do not even make up a half of the thirteen banks.
What are other banks doing? If they feel that CSR is merely a window-dressing or an attempt to pre-empt the role of government as a watchdog over powerful multinational corporations, the Central Bank should intervene to remind them of their obligations.
Whilst this debate continues, a prominent human right activist holds the belief that there is more to it than meet the eye.
GOVERNOR AMADOU KOLLEY
“For me the issue Gambians need to raise first and for most is about the number of banks in the country and the usefulness of these banks in terms of local investments and entrepreneurial development,” says Madi Jobateh, a programme manager at TANGO and a human right activist.
Mr Jobateh argues that having a large number of banks in a relatively emerging economy like The Gambia, and yet still being faced with high interest rate, is ridiculous.
“If you have so many banks in a small economy like The Gambia, yet local investment is limited, yet entrepreneurs are finding it difficult to get loans because interest rates are high, then what is the purpose [of their existence]? What is the use of these so many banks in an economy?” he rhetorically asks.
Jobateh, who has enjoyed prominence for his unwavering stance for an open society, did not fail to accentuate that thirteen banks amidst a population of 1.8 millions are expected to spur colossal economic growth, by stimulating local investments and entrepreneurial development.
Banks may not be blamed
However, the untoward phenomenon that is at present striking the backyard of the banking industry is not merely the fault of banks that are failing in their CSRs; but tax authorities also have a stake in it, because some of these banks are accruing a meagre progress in the financial market.
Madi argues on the other side of the coin: “People have to have the proper perspective [that] banks are not charity organisations that have come to do us a favour. A very important issue that need to be asked in that area is: what incentives are there to make a bank or a private enterprise donate? I am saying this to reflect on the tax issues in The Gambia. Our tax system is such that it does not augur well for CSRs to be fulfilled.”
STANDARD CHARTERED BANK IS AMONGST THE BANKS DOING WELL ON CSR
For many economic analysts, some banks could not fulfil their CSRs, because the tax quotient laid on them is high. Whilst they believe that wherever there is a will, there is a way; government should have a modus operandi that would create a level-playing field for all banks to plough back to communities.
He elucidates: “If a bank donates D100, 000 to a hospital, when we come to tax that bank’s profit, that D100, 000 is part of the taxable income. It is not exempted. So you cannot have a situation where a bank donates money yet it is taxed on that money. If we want to promote CSRs in The Gambia, it is necessary that the government reviews the tax systems to make sure that philanthropy donation to social development courses are not taxed.”
Many analysts subscribed to the idea that government should give some banks concession on their incomes, based on the ground that they have performed well in their CSRs. This would kindle banks’ interest to exercise CSRs and further divest from the Irredeemable syndrome of ‘se croiser les bras’ (French for ‘to fold one’s arms’).
Banks are important institutions in nation’s building; therefore policy makers should not thwart possibilities of having the drivers of our economy exercise their corporate citizenship.
“If that is not happening, then we will have a situation where banks will make incredible profit; because interest rates are high, but they are not going to plough back that much to the society,” the human right activist observes.