Ghana’s new currency, issued in July when the central bank launched a redenominated cedi

With its launch in September of North and West Africa’s first offshore banking unit, Ghana has moved a step closer to realising President Kufuor’s ambition to turn the country into an important financial hub. “Our expectation is that this facility will hasten the realisation of the vision of Ghana becoming a major financial hub of the sub-region,” says the president.

The outcome of a public-private partnership between the government and Barclays Bank of Ghana, Barclays Ghana Offshore Banking Unit is intended to serve as the prelude to the establishment of an international financial centre in Ghana.

Paul Acquah, Governor of the Bank of Ghana (BoG), says the facility will attract banks of international repute to do banking in Ghana. “It will give prestige to the country and make Ghana a gateway to the rest of the world. It is a way of integrating Ghana into the world system.”

According to Dr Acquah, Ghana is building a financial system that will develop over time into a vibrant segment of the international financial industry in the West African region. “It will be a financial centre of global standards in terms of the quality and incentives built into the regulatory environment, the financial institutions and the services they can deliver,” he says.

He adds that this positioning is even more important in the context of the emergence of an ECOWAS regional market with a common currency and free mobility of capital, goods, services and labour. The Eco, a common currency for the member countries of the West African Monetary Zone (WAMZ), including Ghana, is scheduled for introduction at the end of 2009.

Benefits expected to flow to Ghana from the new offshore banking unit are expected to include increased foreign investment and government revenue, job creation and the transfer of skills to Ghanaians. It is also hoped that the offshore unit will enhance the growth of the tourism sector of the economy, and other related sectors.

Kwado Baah-Wiredu Minister of Finance

Finance Minister Kwadwo Baah-Wiredu says that offshore banking will attract “a pool of capital inflows that institutions and companies could tap into to spur the country's economic development, as well as enhanced revenue generation.”

The BoG says it looks forward to receiving applications from other banks wanting to follow Barclays’ example. In October, Stanbic Bank Ghana, a fully owned subsidiary of Standard Bank of Africa, announced that it too plans to operate an offshore banking facility in Ghana.

Dr Acquah stresses that the central bank will license only reputable and internationally active banks for offshore banking. “ We will restrict entrance to credible banks to ensure the credibility of the system.”

An anti money laundering system is being put in place, and Barclays will operate the same strict control measures used at its offshore banking branches in Mauritius and Seychelles. The Financial Services Authority in London is also extending its surveillance into Ghana.

Margret Mwanakatwe, Managing Director of Barclays Bank of Ghana, says offshore banking is only the beginning of the establishment of the International Financial Services Centre. “We will have more activities such as aircraft financing and leasing, shipping registration and management, assets management, funds management and many more.”

She adds that Barclays Ghana is committed to being the leading contributor to Ghana’s future, with full support from its parent company in terms of financial, human, and technological resources. Other key involvements by Barclays in Ghana’s economy include an $80 million credit line for the West African Gas Pipeline project, a €22 million syndicated loan for the expansion of facilities at the Cocoa Processing Company, and funding for the operations of the Volta Aluminum Company, which the government took over a couple of years ago.

Last year, Barclays Ghana went into partnership with Western Union to offer cross-border money transfer services for inward remittances. The remittance market in Ghana, as processed by Western Union, is put at 100,000 transactions per month, with an average value of $290 per transaction.