Exclusive Interview With Mr. Frank Adu Jr, Managing Director, Calbank Ghana

You are well-known today as one of the leaders in the Africa’s banking industry, as the Managing Director/Chief Executive Officer, CalBank Ghana. Please tell us about yourself and some of your experiences growing up.

There isn’t much to say. Growing up, I knew my vision was limitless. I wanted to teach and I did. I have students who are Colonels in the army, Professors and Deans at the University of Ghana. I taught at the University for two years as a teaching assistant.

Significantly, my best friend was my father. When I was ten (10) years old, he woke me up one early morning and said, “You are ten years old and I’m not going to cane you again, that’s the first thing; second, you must always ask why, anytime anybody asks you to do anything. So you must have a questioning mind”. He concluded by saying “if you fail to ask me why, I will cane you”. So, I started asking why. That is not necessarily good in this country because people may feel you are arrogant, you don’t respect etc. I remember having such an encounter in the university. Two instances; my English professor was teaching us 16th century English and I raised my hand in the second lecture and questioned why we were in the 20th century but studying 16th Century English. He said, “Youngman, how dare you? I went to Cambridge University and you are at a place called University of Ghana at Legon and you dare challenge me. Now get out of my class”.

In another class; Geography class, there was one lecturer (name withheld). He too directed me to stand up when I questioned in class. He said, “when I look at you, you are a petty bourgeois that’s why you can ask me such a foolish question”. I said it’s not a foolish question. Needless to say both Professors are good friends of mine now although I haven’t seen the English Professor for a while. My father told me at the age of ten (10) that if anyone tells me something I don’t understand I should ask why. That is how I have always lived subsequently.

You have over the course of your career garnered diverse expertise and experience in Ghana’s banking industry. Kindly tell us about your career journey.

I didn’t set out to be a banker but I wanted to be a teacher. My first degree was Geography. I majored in Geography and minored in Ancient History. After University, I was taken on by my department as a Teaching Assistant. First and foremost, when I was teaching Geography I was very good to the workers in the department; the department secretary who was an old man, the office boy and messenger. Every day, I used to give them 20 pesewas each. I didn’t even know that it was important for them. One day, the messenger informed me that the 20 pesewas I gave to them was very helpful. This was 1984/85. He commented on how the 20 pesewas sustained him daily without the need to buy any food with his personal finance. To them I had become the major source of nutrition for them every day. After two years of my teaching, I had applied and been granted scholarships to two (2) universities abroad and the letter of references required three (3) professors to send in their recommendations. Two (2) of the referees, Dr. Yankson and Prof. Ardayfio Schandorf filled the form and called me to discuss their recommendations. The third (3rd) Professor, name withheld, filled it and enveloped it to be posted.

When I got to the office, his secretary who appreciated my kind gestures toward them instructed me to open the envelope. I was surprised and asked why? I also explained to him the consequences involved once the envelop was opened but he still insisted I did. So, I opened it. Lo and behold, this professor basically appraised me as a 3rd Class student. This was the same Professor I was serving; I did all his research works, wrote all his speeches etc. After reading his recommendations, I tore it up. I took a paper from the secretary and wrote: I resign forthwith and I signed and walked out. I just walked out of the department, and I never went back. So I had to find a job.  During the next year I travelled, started playing polo and then got married.

During this period, I was doing all kinds of jobs as well as teaching privately and then, I went for an interview at Merchant Bank now Universal Merchant Bank (UMB). We were about 25 applicants faced with a panel of ten (10) interviewers. We were screened and left with only two (2) of us. Unfortunately, well fortunately the other applicant was employed. So, I went there to enquire about the basis for the decision and was told the other applicant studied Economics and I did Geography. At this time, I had applied for schools to do my MBA in the US. But as a result of the UMB disappointment, I drove straight to the University of Ghana from UMB and applied for the MBA program for that year. I qualified for the program and ended up in the same class with the former Board Chairman of HFC; Samuel Ashietey, the MD of Ecobank; Ekow Afedzie, the Deputy MD of Stock Exchange; Robert Kow Bentil, the former MD of The Royal Bank etc. That is how I ended up doing finance. I passed and graduated. I, then, got many job offers; with CalBank then Continental Acceptances Limited, Ecobank, GNPC, Unilever etc. and I chose CalBank.

I started with CalBank from the onset as an analyst in 1990. I became the treasurer in 1994 and in 1999, the Deputy MD and finally the MD in the year 2000. So ten (10) years as a staff and seventeen (17) years as MD. Under my tenure, we metamorphosed from a small corporate focused bank with three (3) branches to a universal bank with 28 branches and about 850 employees.

Bank of Ghana, last year, increased the minimum capital of banks to GH¢400million, with a deadline of December 2018 to comply with the new capital requirement. What is your take on this? And how poised is your bank to meet up with this requirement?

First and foremost, let me say, unequivocally that, CalBank will meet the requirements come 31st December, 2018. CalBank has already shared with Bank of Ghana its roadmap to achieving the GHS400M target.

I don’t think that the increase in the minimum capital is necessarily bad. I think that banks need to capitalize. The capital of banks in Ghana has always been low but it is not just about recapitalizing, it is also about the banking sector being given the necessary institutional protection to handle bad loans or reduce the incidence of bad loans or protect our loans.

If we do not have that and we continue to address this as we have done in the past we will continue to have high non-performing loans, which will deplete banks capital over time. Don’t forget that in 2007, when the capitalization was GHS16M, we tried to raise US$200M in capital, for which reason I was taken to an Emergency General Meeting to be fired for being overly ambitious. I don’t want to say the chickens have come home to roost, but clearly there is vision and there is vision.    

Findings have indicated that a robust performance in exports and higher investment flows should buoy Ghana’s economic growth in 2018. However, the economy’s elevated public debt burden and a high level of non-performing loans in the banking sector pose downside risks to the outlook. What is your take on this?

Public debt burden is a given. It is a fact that 70% or so debt to GDP ratio for the size of our economy is high. Similarly, Non–Performing Loans of 21% in the banking sector is also high. But I think that all these indicators can be dealt with once we rein in the rampant and rabid corruption in the Ghanaian fabric.

Corruption affects everything we do economically. If government borrows heavily for infrastructural development but half of the amount is dissipated or lost through corrupt practices, there is no amount of exports or investment flows which would buoy the economy and if corruption is not dealt with properly then the country is not going to get the high investment flows. If the NPLs are not reined in, then capital dissipation for banks become an issue. When that happens, banks would not be able to support economic growth and they will always be asked to recapitalize. At some point, investors in the banking sector without seeing returns on their investments will not be interested in reinvesting.

I persist in my thoughts, that the NPLs are not the problem but our biggest problem is corruption. So we need to strengthen the institutions and institutional framework in the country. But all that is undermined because of corruption; where a regulator becomes a player, there is obviously going to be a problem. Our economy in all sectors is replete with such conflicts of interest.  

Some experts have predicted GDP growth of 6.8% in 2018. What role will your bank play to ensure that your country experience a robust growth in 2018?

CalBank continues to invest in productive sectors of the economy. Our balance sheet or our loan portfolio will show you that around 70% of our loan book is actually medium to long term loans financing the real estate sector, manufacturing and projects not in trade, not in the business of importing products from China to be sold in our economy. We invest in industry, manufacturing, energy, education and in infrastructure. We have built a US$51 million price Off Dock Container Terminal at the Takoradi Harbour, one of Ghana’s harbours, which has helped to decongest the port thereby creating room for ease and speed of doing business in Ghana. We also invest in the transport sector heavily. Clearly, given our size we are punching above our weight in the area of the economy where productivity impacts positively on GDP growth.

As a Bank we will continue to support industry, SMEs and the retail space. We have re-strategized going forward to ensure that the retail space is fully utilized. With Government’s digitalization focus, it has led to reduction in the bureaucratic red tapism and the bottlenecks that previously characterized our business operations. For instance, with the paperless clearing at the country’s ports, imported goods no longer take long hours, reducing the clearing process from over fifteen (15) days to two (2) days. We will continue to ensure that our operations are aligned to ensure we are able to provide support to businesses in this sector. For that matter, our branch at the Sekondi Off Dock Container Terminal was fully digitalized to tie in with the national agenda of paperless port clearing. So upon walking into the branch and walking out, it’s completely paperless.

I do, however, have a problem with the make-up of government, that is, the Ministry of Trade and Industry. I think that ministry should be divided into two; i.e. Trade and Industry because one is the competitor to the other. Obviously politicians, needing to show rapid growth, will support trade because it is a quick turnaround business as against industry and manufacturing or agriculture or certain agriculture type products which will require patient capital.

First, I would suggest to any government that, they should seek to create Ministry of Trade and Ministry of Industry separate from each other. Next, they need to deliberately focus resources on each of them if they want to develop GDP and generate growth in high numbers on a sustainable basis. Finally, and more importantly, there must be deliberate resources channeled to industry and agriculture because they give the country the required sustainable growth as well as job creation.  So let’s see how the Government’s planting for food and jobs program will pan out.

Financial Inclusion and access to finance have been a major challenge faced in Africa. Your bank has been involved in projects aimed at reaching the unbanked population. Please tell us more about your efforts towards financial inclusion?

As the use of digital technology and smart phones expands in emerging markets such as Ghana, CalBank as a matter of strategy has postured itself to take full advantage of this burgeoning segment to expand our customer base and provide high quality service.

As a strategy, CalBank’s focus is reliant on electronic and alternative delivery channels (ADC) contrary to brick and mortar structures. For this reason, we invest heavily in building a robust IT infrastructure that will enable the bank to reach across the nation. First, we have deployed over 100 ATMs across the nation in areas of high population density to serve the people there. Whereas some of these ATMs pay out cash a few of them receive cash as we identify that customers cannot travel long distances to access our branches. We also have the Internet Banking and our Mobile Apps which are accessible to customers who are IT savvy.

For such customers who are not, we developed the USSD short code *771# where customers without internet access can easily access their banking services. This USSD enables our customers to connect their Mobile Money Wallets to their bank accounts, so that wherever they are and at any time, they can easily transfer funds from their accounts into their wallets and cash out. With this service, the bank doesn’t have to be everywhere.

In addition, as part of our plans of reaching the unbanked, CalBank partnered with IFC to introduce our Agency Banking franchise. Here, we are deploying about 1,400 agents across the nation to provide such services as banking and savings, microloans, micro insurance, provision of loyalty programs etc.

Finally, our financial inclusion projects also include ensuring that we increase our partnership with the Telecommunications offering mobile money services as we intensify our provision of mobile banking.

Ghana Labour Force Survey Report says more than 1.2 million persons from 15 years and older are unemployed, representing the total unemployment rate of 11.9%. What is your advice to government on jobs creation? And kindly tell us some of your bank’s efforts to promote SMEs, entrepreneurship and youth empowerment in Ghana.

I think on the issue of job creation; we have to look at the genesis or the root of the problem. Unfortunately, for some reasons successive Governments after Kwame Nkrumah have thought that, the way to handle education strategy in this country is to make everybody a university graduate even though, we have polytechnics which focus on artisanal skills, technical skills and productive skills.

The past few years, governments have converted these polytechnics into what they call Universities and these universities are teaching courses which don’t help anyone to become employable. So we are graduating 80,000, to 100,000 unemployable youth every year, so of course you have a problem. We have all these people walking about rightly so calling themselves graduates with absolutely no employable skills. So what will be my advice to government on job creation, I think they should go back and look at the educational policy. The developed countries have on average between 45% – 65% of students leaving high school willingly going into technical vocations because the systems have also set it up such that, it pays to go into technical vocations.

We have a situation where everybody is searching for a white color job and so you go to a university and they will deliver you a course in Public Administration; for instance, BA Public Administration, BSc in Public Administration, MPhil Public Administration, Masters (MA or MSC) Public Administration, Doctorate Public Administration and when you look at the syllabi there is no difference, so what is the point, it doesn’t achieve anything. It doesn’t develop the country. We are just producing half-baked unemployable graduates who become frustrated and then they become societal misfits.

So government should go back, understand the problem from what we produce in our educational institutions and then with a strategic view point look at the sectors that can provide jobs quickly. So we talk of agriculture; agriculture is key but the young boys and girls of today don’t want to go into agriculture because it’s an information technology age and we don’t have a Silicon Valley. Must we create a Silicon Valley type operation here? Why not, it is possible. But I think that, reviewing Maslow’s Hierarchy of Needs will provide avenues for job creations which will address these problems that we have.

On the issue of SMEs, entrepreneurship and youth empowerment in Ghana, the bank knows that without supporting SMEs it will not necessarily achieve its vision, growth and profitability targets, so we have a robust SME franchise which keeps growing. Doing business with the SME sector in today’s digital era requires new thinking. Our financial inclusion products also entail making E-loans on mobile platforms. I am very excited about that product because CalBank is one of the bigger “MOMO Banks” offering mobile banking so I think it is one of those things we recognize at the bank that if we did not address seriously the future of the bank itself will be questioned.

How do you provide mentorship for the young people in your country?

At CalBank, we ensure that coaching and mentorship is well grounded in the fibre of the bank particularly in this era of high unemployment. We do so through the bank’s Graduate Training (GT) Programs. There are designated mentors as part of this mentoring and coaching program who train the young graduates as they are inducted into the bank. They are given mentors, and these mentors would work with them with me of course as the Chief Mentor for the duration of the GT program which is twelve (12) months.

Again, managers outside of the Graduate Training Programs are also encouraged to coach and mentor the younger generation. We have a few of our managers who visit some of the educational institutions on a rolling basis to engage and share their knowledge with them. I have also visited some institutions both here in Ghana and other top management schools outside of Ghana where I interacted with the students as well as even for other work professionals.

Mentorship for me is key, and so what I have sought to do and have been doing for almost a decade, is becoming a patron of Waves International. Waves International is a Not for profit organization which basically goes to the schools and provide guidance, counseling, employer opportunities, career options and career pathing, supporting those entrepreneurial skills with advice etc.

And having worked with Waves for the past 10 years or so I have had the opportunity to meet with students from almost all the universities. Most times, on my visits, I engage with about 30 – 40 students at a sitting. There was one such interaction at the Kwame Nkrumah University of Science and Technology (KNUST) and I think there were about 200 students and I do this on an ongoing and yearly basis. So these are the various channels through which we do this and I take it very seriously.

How has your bank embraced digitalization and innovative electronic banking in its approaches?

Without a doubt, the wave of now and the future is digitalization and electronic banking at its highest level. It dawned on me again about eight (8) years ago, when my first son who had then moved from the US to UK called me once and said, “Dad, I just got a call from the bank” and I said what is the problem, and he said, “the bank said I should come to the banking hall, they need to speak to me about some transactions.” I had opened bank accounts for him when he was in New York and when he relocated to the United Kingdom. So, I asked what the problem was? “But why must I go to the banking hall, I lived in the US for five (5) years from the day you walked me to Citibank to open an account and I have never had to go to the banking hall since then. I did everything by my laptop or phone. Why must I take a bus or taxi and go to the bank, I don’t want to go to the bank, I want to do my banking on my phone.”

That was when it dawned on me that, if you took the demography of this country, 65% or so of the population is the youth and majority of that 65% fall in the ages of 15-28. These people have grown up on tablets and hand held devices, coding is their new language, mobile applications are what they eat, so if you are not going to give them the ability to use their telephone, then you are going to lose out on their custom and business.

So we have had to gladly embrace digitalization and electronic banking and so for the past few years, particularly in the last two (2) years going forward, our strategic orientation and mantra has been digital transformation. We have and continue to provide all the necessary resources, technology platforms and technical support etc. engaging the right kind of people to actualize this vision so that we are not left behind. This vision also will necessarily now include a strategic look at our business orientation, so whereas the bank has in the past been predominantly corporate oriented, we’re now using financial inclusion to push our retail and consumer banking strategy.

In summary we are moving from BRICKS TO CLICKS.

Thank you.