In 1891 George Neville, a representative of Elder Dempster & Co in Lagos, Nigeria, recognised that banking facilities were urgently required in West Africa, especially in Lagos. Neville and a colleague, Alfred Lewis Jones, believed that the best way forward was to get an existing bank to establish a branch in Lagos. Neville approached the African Banking Corporation, established in South Africa in 1891. Its board of directors in London agreed to extend their business operations to Lagos but made it known that their main interest was in South Africa.

Shortly thereafter a series of meetings were held between Elder Dempster and the African Banking Corporation to discuss the takeover of the Lagos branch by Elder Dempster. The Bank of British West Africa (BBWA) was registered as a limited liability company by the directors of Elder Dempster and began trading on March 31 1894, initially in England and in Lagos. Of the 3,000 shares issued, Alfred Jones took up 1,753 and his partners, Alexander Sinclair and W.J. Davy, took up 433 each. The rest went to the other appointed directors. In 1896, a new branch of the Bank was opened in Accra and in the Gold Coast (now known as Ghana).

Early meetings were held with the Crown Agents and the Colonial Office for the monopoly of the importation of silver coins. The coins were used in the Gold Coast for the purposes of trading and for making salary payments to Colonial Government officials and troops stationed in the Colony. Discussions also centred around the return of defaced silver coins to the Royal Mint in London.

Shortly after the Bank was established in Accra it was able to acquire the business of maintaining the Government accounts. In addition, it was able to introduce the use of cheques in settlement of Government accounts which helped to advertise the usefulness of the Bank to the public.

By 1918, the operations of BBWA in the Gold Coast had been so successful that another expatriate bank, the Colonial Bank decided to commence banking there. In 1925 the Colonial Bank merged with the Anglo-Egyptian Bank, the National Bank of South Africa and Barclays Bank under the leadership and name of Barclays Bank (Dominion Colonial and Overseas). Barclays soon developed into a strong competitor of BBWA.

From the late 1920s until the early 1950s, banking services in the Gold Coast continued to be exclusively provided by these two expatriate banks. They functioned largely as commercial banks, facilitating the trading of commercial firms and assisting in revenue collection and the payment of salaries by the Colonial Government. It may be noted that the BBWA functioned additionally as the bank of issue for the Colonial Government.

Branches were opened in many of the provincial capital towns and in the main trading centres in the Gold Coast Colony, and, subsequently, in Ashanti and the Northern Territories of the Gold Coast.

In 1953 the Bank of the Gold Coast was set up by the Government and Alfred Engleston, formerly of the Bank of England. Eventually the Bank was split into two: the Bank of Ghana, operating as a bank of issue, to be developed into a complete central bank; and the Ghana Commercial Bank, to be developed into the largest commercial bank with a monopoly on the accounts of public corporations.

On March 6, 1957 the Gold Coast attained independence from Great Britain and became known as Ghana. In July, Alfred Engleston was appointed as the first Governor of the Bank of Ghana. As expected, the Bank of Ghana took over the management of the currency and in July 1958 issued its first National Currency - the Cedi - to replace the old West African currency notes. The Ghana Commercial Bank assumed the role and functions of Government bankers and began to take over the finances of most Government departments and public corporations.

The Bank of Ghana quickly developed into a strong competitor of the expatriate banks by opening branches in most of the towns and centres in which they had been operating as well as moving into new areas such as the Ashanti and the Northern Regions.

The advent of the new Government, elected by popular vote in 1957, brought the establishment of more banks. Banks incorporated by legislation between the period 1957 to 1965 include: the Ghana Investment Bank as an Investment Banking Institution; the Agricultural Development Bank for the development of Agriculture; the Merchant Bank for merchant banking; and the Social Security Bank to encourage savings. In conformity with the economic policy of the time all these institutions were incorporated as state-owned banks.

The first national Government commenced its tenure with a large surplus on its Balance of Payments Account and with a comparatively good infrastructure to enable it to succeed. However, by 1963 it was becoming increasingly clear that the country was experiencing serious economic difficulties due to its Socialist policies. In 1961, Exchange Control had been extended to cover all payments to non-residents and to all places outside Ghana; to imports and exports from or to all countries; and to the issue and transfer of almost all securities to or by non-residents.

These economic difficulties led to a change in Government in 1966. However, the country continued to face economic problems until 1983 when, in an attempt to reverse the situation, the Government, with the assistance and guidance of the International Monetary Fund (IMF), introduced the Economic Recovery Programme (ERP). This signaled the end of Socialism in Ghana and provided a useful tool for economic development by embracing the market economy; privatisation; the liberalisation of trade and financial restrictions; and the divestiture of Government interests in public corporations.

Import licensing was quickly abandoned and exemptions were granted in relation to many of the restrictive clauses of the Exchange Control Act. Furthermore, an Investment Code was enacted to make provision for the relaxation of many of the earlier restrictions in trade and finance and to encourage private investments. These newly adopted concepts were incorporated into legislation, particularly in regards to banking, non-banking financial institutions and securities.

Thus, the Banking Law was enacted in 1989, enabling suitable locally incorporated bodies to file applications for licences to operate as banking institutions. Subsequently, a number of corporate entities were licensed to operate as banks, including Meridien (BIAO) Trust Bank, CAL Merchant Bank, Allied and Metropolitan and ECOBANK.

Provision is made for the licensing of non-banking financial institutions under the Financial Institutions (Non-Banking) Law 1993 (P.N.D.C.L. 328). This legislation makes provision for the licensing of non-banking financial institutions seeking to operate as, inter alia, discount companies, finance houses, building societies, or leasing and hire-purchase companies. Such institutions now include the Home Finance Corporation which provides finance for the acquisition of houses and the City Savings and Loans Limited which grants various forms of financial assistance and accommodation to small scale business enterprises.

The enactment of the Stock Exchange (Ghana Stock Exchange) Listing Regulations 1990 and The Securities Industry Law 1993 serves to show how far Ghana has traveled away from the system of the planned economy and state control. Since 1993, the Ghana Stock Exchange has been facilitating the purchasing and selling of equity shares listed on the Stock Exchange. Both residents and non-residents are allowed to trade freely in listed shares with exchange control no longer required for purchasing. The legislation also makes provision for the licensing of dealers.

Provision is made in the ERP for measures to be taken to ensure economic discipline and financial control. Many of these provisions appear in the various legislation enacted for the business and management of banking institutions, non-banking financial institutions and the Ghana Stock Exchange. Such provisions cover: the appointment of suitably qualified corporate bodies and persons; stringent procedures to avoid mismanagement; heavy penalties with regard to fraud and embezzlement and other criminal acts.

Wide powers have been granted to the Bank of Ghana, the Minister for Finance and Economic Affairs, the Securities Regulatory Commission and the Head of Banking Supervision, appointed under the Banking Law 1989, to ensure effective control and proper management and for the early detection of irregularities.

In 1992 the Government began to privatise, what has for sometime been regarded as the flag-ship in banking, the Ghana Commercial Bank; and in 1994 took steps to divest itself of most of its interests in the Social Security Bank. The Ghana Commercial Bank share-offer is due to end shortly. The excerpt from the Mini Prospectus printed below covers the offer for issue and sale of relevant shares:


In 1992, the Government of Ghana, as the sole shareholder of GCB approved the divestiture of the Bank. In furtherance of the divestiture, the Bank was converted into a public limited liability company under the Statutory Corporations (Conversion to Companies) Act 1993 (Act 461) in 1993 and subsequently registered as a public limited liability company limited by shares under the Companies Code 1963 (Act 179) in September, 1994. As part of the divestiture, the Government will sell 60 percent of its equity holding in GCB.


In order to arrest the economic decline that plagued the country from the 1970s to the early 1980s, the Government launched a World Bank and IMF sponsored Economic Recovery Programme (ERP) in 1983. The resulting policy reforms and benefits have been widespread, extensive and substantial. In 1988 the Government initiated the Financial Sector Adjustment Programme (FINSAP) as part of the ERP. Under FINSAP, the banking and financial services industry has been restructured and revitalised through a number of policies and measures covering legislative, regulatory and financial issues. The focus of the financial restructuring is to inject new capital and clean up the asset portfolio of the state-owned banks."

An important dimension of FINSAP has been the divestiture of state-owned banks. This is within the broad framework of the Government's divestiture programme under ERP, which seeks to reduce state control and ownership in industry. Under the first phase of the programme, three state-owned banks were slated for divestiture including GCB and the Social Security Bank Limited (SSB).

The Bank of British West Africa is now known as the Standard Chartered Bank (Ghana) Limited. The Barclays Group is now known as Barclays Bank (Ghana) Limited. Both banks are currently incorporated under the Companies Code 1963 (Act 171) as Ghanaian companies as required by the Banking Law 1989. The country continues to derive tremendous benefits from these two banks. Immense financial assistance was received from Standard Chartered Bank (Ghana) Limited during a very difficult period in 1984 and further co-operation continues to be received from these two major expatriate banks. These are some of the memories which will be recalled with gratitude from the people of Ghana as the country moves closer to its Centenary Celebrations for the first one hundred years of banking in the latter part of this year.

For further information please contact Vidal L Buckle & Co, Ghana: Tel 233-21-775468 or Fax 233-21-775034 or enter text search 'Vidal L Buckle and Co' and 'Business Monitor'.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.