In order to boost savings culture and help banks to raise more capital, Groupe Nduom (GN) is urging commercial banks in the country to consider cutting down profit-making objectives and raising interests on savings.

This was contained in a report by GN Research after conducting a study on the banking sector. GN has also advised commercial banks to lower their profit-making goal “by not only calling on Ghanaians to develop a savings culture, but working together to increase the returns on savings for all”.

General Manager of GN Research, Samuel Kofi Ampah, said: “This is expected to improve growth in financial inclusion, minimise the present cost of raising deposits and reduce the present cost of borrowing which is almost collapsing private sector growth.”

According to Mr Ampah, the call for the inculcation of the savings culture in Ghanaians by the Bank of Ghana and some international organisations had failed as most commercial banks were not willing to adjust rates on savings.

He argued that most importantly “returns on savings influence the demand for a savings account” aside from all the other factors.

He explained that the recent hikes in inflation, depreciation of the cedi, rising unemployment, and low real incomes with a high dependency ratio had reduced the luxury of households to save.

“ … The decline in savings culture among Ghanaians could partially be linked to the low savings rate offered by most banks,” he added.

The study by GN Research further revealed that interest payouts by commercial banks in Ghana on savings accounts indicate that the real return on savings in Ghana is depreciating gradually as the central bank struggles to control inflation.

Mr Ampah said: “Arguably, the highest rate recorded on a normal savings account is GN Bank, with 9 per cent as compared to an average inflation rate of 18.2 per cent since 2016 year-open.”

The research also indicated that 8 out of 24 banks offer interest on a pesewa savings.

It said Barclays Bank, Standard Chartered Bank, Access Bank, uniBank, and GT Bank among others, have separate savings accounts for different categories of customers.

For instance, Standard Chartered Bank has the Savings Plus, Premium Savings and My Dream Accounts with a maximum interest rate of 5%, 5.5%, and 5.5%, respectively. Barclays Bank also has the Instant savings, Target Save, Premier High and Bonus Savings accounts with a maximum interest rate of 2%, 10%, 3%, and 2%, respectively.

However, one needs to save above GHS100,000 for Barclays Bank and GHS500,000 for Standard Chartered Bank to enjoy the maximum savings rates stated above.

GN Bank, Prudential Bank, Bank of Baroda, GT Bank, uniBank, Fidelity Bank, National Investment Bank, and FBN Bank are the only banks that offer savings rate on even a pesewa balance. These rates range from 1.5% for Fidelity Bank to as high as 9% for GN Bank.

“The minimum account balance needed to earn an interest on your savings account is GHS10 for Access Bank and Bank of Africa; GHS20 for Royal Bank; GHS30 for Ecobank; GHS50 for Energy Bank, Agricultural Development Bank (ADB), UBA and Barclays Bank; GHS100 for UT Bank and Zenith Bank; GHS200 for CAL Bank; GHS300 for GCB Bank; GHS500 for Capital Bank and UMB; GHS 1,000 for HFC Bank and Stanbic Bank; and GHS2001 for Standard Chartered Bank.

“Broadly, this could be the reason for not getting the expected returns on your savings accounts given that many commercial banks are not forthcoming with this information,” the research emphasised.

“These statistics are rather unfortunate given that banks need more deposits to offer affordable loans to businesses. The current practice of raising cheap deposits to finance the credit business of commercial banks make them look somehow selfish in their financial service delivery. At the highest savings rate of nine per cent on the domestic market and an average lending rate of 33 per cent, many businesses and individuals are sceptical, in leaving their monies in a savings account,” Mr Ampah stressed.

The research further explained that coupled with a persistent rise in inflation and fast depreciating cedi, the idea of returns on savings is gradually vanishing among the populace with no clear solution in sight.

Commercial banks are now compelled to hire additional staff to raise deposits, which obviously come at a cost and infiltrate the cost of lending to businesses.

The impact on the macro-economy, the report indicated, is enormous given that a high savings culture could provide funds needed to finance a percentage of government’s fiscal deficits at a much lower rate than the usual Treasury bill rates, which have ballooned Ghana’s debt interest payments to about GHS9.6billion.