Members of the banking public could still use some education on the 17.5% VAT for financial services B&FT’s interaction with bankers and members of the public has shown.

Bankers in particular feel that the media campaign that was run on the new charges did not last long enough; leaving a lot of people still confused about the services it covers.

Two bank managers who spoke on condition of anonymity because they are not allowed by their banks to comment on the matter in public, expressed disquiet about the paucity of public education as well as the large list of items the charges cover.

“I believe the adverts on this policy should have still be running on television and radio to date,” said one bank manager. “We are dealing with a new policy that is very sensitive to customers because it involves increasing customers’ financial obligations, and so we need to address it properly for them to understand and accept it without grumbling. The period within which the adverts were carried out cannot achieve these results. Some of the customers even think that we the banks are the ones implementing the policy, so some come with disquieting faces asking us not to implement it.”

The policy, as little understood as it is, will make it difficult for the banks to convince the large unbanked population to start banking, the manager said. “These people are already rationalising that it is a cheat to save money in the bank because of the bank charges. Now that there are additional charges, how can we convince them again?’’ he asked.

The Ghana Revenue Authority (GRA), on January 5, 2015, directed banks to start implementation of the new tax policy following an earlier suspension due to concerns that the public had not been educated enough.

Another bank manager noted: “The adverts were carried out for a short period and we never heard anything about it again until the minister highlighted it in the 2015 budget statement. And even the budget did not specifically state the exact date it will take effect. We just received a directive in January to implement it on January 5th. I can tell you that most banks were not even able to properly educate their own staff about it, but a policy like this needs to be understood by both bankers and customers so as to have a smooth implementation”.

Some members of the banking public who spoke to the B&FT equally expressed concern that the education did not go far.

“For me, if they really educate us and I get to understand it well -- and paying it will not really result in any significant losses to me, I would have no problem with it. But as at now I still don’t understand the whole thing,’’ said a businessman known as Mr. Twumasi

Another businessman called Mr. Annan stated: “For me, the nature of my business requires that I use the bank always, because I normally transfer money both within and outside Ghana. I really want to be aware how this policy will impact my business, so they should educate us more on the issue. For me, the whole thing is confusing”,

A market woman by name Maame Ama, on her part said she will withdraw all her money from the bank because she has heard that “even if you deposit money, you will be charged VAT on it”.

Asked whether they feel some of the items on the list should have been excluded, one of the bank managers said: “Of course, I believe so. Initially, the message we got from the advert depicted that the VAT will be on only some essential financial services. However, when VRA released the list of items that will attract the VAT, it was shocking. Almost all the major financial services we provide to our customers are on the list. Some of them are even ridiculous. Just imagine charging VAT on closure of accounts?’’

The second manager equally felt some of the items are “outrageous”, adding that “Initially, they said the VAT will be charged on some few items; however, GRA released a long list that included some basic services we render here. For example, the VAT affects processing charges on loans. Already, customers are paying high interest on loans, and yet they are going to be charged VAT on the interest they are paying. It makes it unconscionable”.

It is estimated that seventy percent of Ghanaians do not have a bank account. Not only because of poverty, but also because of the cost, travel-distance and amount of paper-work involved in opening one, says the World Bank.

As a result, the twenty eight (28) universal banks in Ghana have seen this as an opportunity to increase their market share, and they have over the years developed enchanting products and packages to convince these potential newcomers to join the bankable population. Will this new 17.5% VAT on financial services help the banks in this hunt?