KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
INSTITUTE OF DISTANCE LEARNING – ACCRA CENTRE
Personal inward remittances through Banks in Ghana; A Case Study of some
selected branches of Ecobank Ghana Limited
by
Juliet Akua Amankwah (BBA)
(PG 4085410)
A thesis submitted to the Institute of Distance Learning, Kwame Nkrumah
University of Science and Technology, Kumasi, in partial fulfilment of the
requirements for the award of a COMMONWEALTH EXECUTIVE MASTERS
DEGREE IN BUSINESS ADMINISTRATION
September 2012
1
DECLARATION
I hereby declare that this submission is my own work towards the Commonwealth
Executive Masters of Business Administration (CEMBA) and that, to the best of my
knowledge, it contains no material previously published by another person nor materials
which has been accepted for the award of any other degree of the university, except
where due acknowledgement has been made in the text.
Juliet Akua Amankwah
----------------------------
----------------------------
PG 4085410
(Student)
Signature
Date
Certified by:
Mr. S.A. Kyeremanteng
(Supervisor)
-----------------------------Signature
2
------------------------------Date
Certified by:
Prof. I.K. Dontwi
(Dean, IDL, KNUST)
-------------------------------Signature
3
-----------------------------Date
DEDICATION
I humbly dedicate this study to God Almighty who made this possible. With lots of love
I dedicate this study to my family especially my husband Mr. Samuel Amankwah who
gave me encouragement when things where tough and to all my friends.
4
ACKNOWLEDGEMENT
I am eternally indebted to the Lord Almighty, who has always been our source of help
in all things. In life, our unrelenting quest for academic glory has drawn us to the
attention of personalities of interest and those whose recognition and efforts to develop
the potentials in us, which we cannot afford to ignore. But to thank those individuals
one after the other will constitute another thesis. I therefore, appeal for forgiveness of
those of them that may not see their names here but would have loved to. To this end
my thanks goes to Mr. S.A. Kyeremateng, lecturer at school of business, IDL, KNUST,
my dissertation supervisor whose professional approach during the period of this
research work was second to none..
My thanks also go to all my course mates and the staff of Ecobank and the customers of
the bank who made this study possible. Finally, I give thanks to my family for great
support and cooperation throughout the course of study.
5
ABSTRACT
Personal inward remittances have become a source of external finance whose
magnitude exceeds the amount of official development assistance in some developing
countries. This study was used to assess the personal inward remittance to identify the
different channels, determine the factors that influence the choice of the channel by
remittance recipients and to find the challenges that hinder remittances services The
main objective of the study was to investigate personal inward remittances through
banks in Ghana using Ecobank Ghana Limited as a case study, identify the different
channels, determine the factors that influence the choice of the channel, as well as find
the challenges that hinder remittances services. A sample size of 260 was taken out of
2250. Questionnaire was the main research instrument used for the collection of
relevant data from the respondents. The results revealed that, most of the customers
were aware of the various transfer channels at their disposal and mainly use the bank‘s
channel for money transfer. The customers‘ main likeness about the money transfer
service was due to its speed which was agreed upon by most of the customers, whereas
what they dislike was the associated cost with it. It was recommended that a level
platform of communication should be created between the technical team and the
bank‘s staff to address technical problems such as software and internet issues early
enough to help deliver a better services to the customers.
6
TABLE OF CONTENT
Page title
i
Declaration
ii
Dedication
iii
Acknowledgements
iv
Abstract
v
Table of contents
vi-ix
List of Tables
x
List of Figures
xi
List of abbreviation
xii
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1
1.2 Statement of the problem
4
1.3 Objectives of the study
6
1.4 Research Questions
6
1.5 Significance of the Study
7
1.6 Brief Research Methodology
8
1.7 Scope of the Study
9
1.8 Limitation of the Study
9
1.9 Organization of the Study
10
CHAPTER TWO: LITERATURE REVIEW
7
2.1
Introducti
on
11
2.2
C
oncept of Money Transfer/Remittance
11
2.3 History of Money Transfer
14
2.3.1 Evolution-The lifecycle
14
2.3.2 Revolution-breaking the barriers
15
2.3.3 Innovation - Nothing less than banking service
15
2.4 Money Transfer/Remittance in Ghana
16
2.4.1 Internal Migration
17
2.4.2 Remittance Sources
19
2.4.3 Characteristics of the Remittance Industry
19
2.4.4 Types and Coverage of Remittance Firms
20
2.5 Remittance Instruments
21
2.6 Access to Other Financial Services
22
2.7 The Regulatory and Business Environment
23
2.8 Barriers of Entry
24
2.8.1 Competitive Factors
24
2.8.2 Remittance Fees and Identification Requirements
24
2.8.3 Remittance Service fees
25
2.8.4 Identification requirement
26
2.9
T
he Money Transfer Market
26
8
2.10 The Financial Sector in Ghana
31
2.11 Conceptual Framework
33
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
35
3.2 Research Design
35
3.3 Population
36
3.4
S
ample Size
36
3.5 Sampling Techniques
37
3.6 Sources of Data
39
3.6.1 Secondary Sources of Data
39
3.6.2 Primary Sources of Data
40
3.7 Data Collection Method
40
3.7.1 Questionnaire
40
3.7.2 Interview Guide
41
3.8 Data Analysis
41
3.9 The Company Profile
42
CHAPTER FOUR: DATA ANALYSIS, PRESENTATION, AND DISCUSSION
OF RESULTS
4.1 Introduction
47
4.2 Background of Respondents
48
9
4.2.1 Age of Respondents
48
4.2.2 Sex of Respondents
49
4.2.3 Educational background of Respondents
50
4.2.4 Occupation of Respondents
51
4.3 channels through which personal remittances are received
53
4.4 Years respondents have been receiving remittances
55
4.5 Factors that influence the choice of the channel by remittance recipients
58
4.6 Satisfaction of transfer services
60
4.7 Respondents‘ expectation with transfer services
61
4.8 Challenges that hinder remittances services from the point of recipients
62
4.9 Effects of money transfer on Ecobank Performance
65
4.10 Challenges in planning and expectation of money transfer strategies
66
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
67
5.1 Summary of Findings
67
5.2 Conclusions
70
5.3 Recommendations
70
5.4 Suggestion for further research
73
REFERENCES
74
APPENDIX: Questionnaires
78
10
LIST OF TABLES
Table 3.1 Sample Size and Technique for Selecting Respondent
39
Table 4.1: Age Distribution of Respondents
49
Table 4.2: Sex Distribution of Respondents
50
Table 4.3: Channel for Transfer of Money
54
Table 4.4: Factors that influence choice of transfer channel
59
Table 4.5: Respondents Experience with Money Transfer
62
Table 4.6: Challenges faced by respondents in receiving
remittances from Ecobank
64
11
LIST OF FIGURES
Figure 1: Money Transfer Market
28
Figure 2: The remittances channels and the factors
that determine particular channel
34
Figure 4.1: Level of Education of Respondents
51
Figure 4.2: Occupation of Respondents
53
Figure 4.3: Percentage of year‘s respondent has been receiving remittance
56
Figure 4.4: Frequency of remittances by respondents
58
Figure 4.5: Satisfaction of Service by Respondents
61
12
LIST OF ABBREVIATIONS
AML: Anti-Money Laundering.
ATM: Automatic Teller Machine.
ARB: Association of Rural Banks
BoG: Bank of Ghana.
CIG: Corporate Initiative Ghana
CIMG: Chartered Institute of Marketing Ghana.
DFID: Department for International Development
EDC: Ecobank Development Corporation.
EGH: Ecobank Ghana.
ETI : Ecobank Transnational Incorporated ,
ECOWAS: Economic Community of West African State.
EU: European Union.
EDC : Ecobank Development Corporation
FDI: Foreign Direct Investment.
FFR: Financing Facility for Remittances
GNP: Gross National Product
13
GDP: Gross Domestic Product
GLSS: Ghana Labour Salary Scheme
ICT: Information Communication Technology.
MFIs: Microfinance Institutions
MTCs: Money Transfer Companies.
MTOs: Money Transfer Organizations
MTN: Mobile Telecommunication Network
ODA: Official Development Assistance
PSP: Payment Service Provider
RSPs: Remittance Service Providers
RTGS: Real-Time Gross Settlement.
SWIFT: Society for Worldwide Interbank Financial Telecommunication
SPSS: Statistical Package for Social Science
SOL: Single Obligor Limit
TTB: The Trust Bank.
US: United States.
UAE: United Arab Emirates.
14
CHAPTER ONE
INTRODUCTION
1.1
Background of the study
Large population of Ghanaians live outside Ghana and their contribution to the
Ghanaian economy and to individual households is increasingly recognized. Mass
emigration in the 1970s and 1980s has helped to sustain a steady flow of migrants up to
the present and created a large diaspora that spans Europe, North America and
elsewhere. This has shaped remittance flows, the volumes of which are difficult to
measure accurately (Higazi, 2005).
The flows of money from Diasporas or immigrants to their countries of origin have
become more and more important source of income for their families and relatives in
their home countries. ―Remittances are the largest source of external financing in many
poor countries‖ (Ratha et al, 2007 p1).
Remittances have been a significant contributor to family income and investment, with
subsequent effects on poverty and inequality. They are mostly used for direct
consumption by households, including education and health. It is widely accepted that
most remittances are spent on consumption, followed by investment (on a much smaller
scale). Especially in times of economic depressions and external shocks, remittances
have been extremely important to the Somali economy because they tend to smooth
consumption and thus create a ―buffer‖ against shocks. Consumption accounts for at
15
least half of remittance spending, most likely up to two thirds. Studies on remittances in
Somali land show that increasingly remittances are also used to fund new organizations
and development of projects (Hansen, 2003).
Whether invested or consumed, remittances have important macroeconomic impacts.
They generate positive multiplier effects, while stimulating various sectors of the
economy. Adelman and Taylor found that for every dollar Mexico received from
migrants working abroad, the GNP rose by $ 2.69 to 3.17 depending on whether
remittances were received by urban or rural households (Rathe, 2003).
Citing Maimbo (2003) and Sander (2003), Quartey (2006) revealed that migrant
remittances have become a stable source of income for most developing countries,
proving to be more stable flow than official development assistance (ODA) and other
private capital flows. Global remittance flows currently exceed $420 billion, about $317
billion of which goes to developing countries—more than three times the ODA these
countries now receive and more than 10 times the $2.98 billion in remittances they
received in 1975 (World Bank, 2009).
Studies analyzing the impact of remittances show that these inflows are beneficial at all
levels—individual, household, community, and national. This trend is no different in
Ghana, where migrant remittances increased from about $449 million in 1999 to $1.8
16
billion in 2008, far exceeding ODA (Bank of Ghana 2008). The World Bank figures on
migration and remittances show a smaller increase in remittances to Ghana, from $31
million in 1999 to $128 million in 2008 (World Bank, 2009).
Over the past decade, remittances have had a significant impact on the economy of
Ghana. According to the Bank of Ghana (BoG), remittances to Ghana have increased
from about $450 million in 1999 to $1.8 billion in 2009, equivalent to 11% of GDP and
exceeding Official Development Assistance. Increasing the flow of remittances,
reducing the cost of these migrant money transfers and encouraging the flow of more
formal remittances holds significant importance for Ghana‘s economic development
(DFID, 2011).
It was discovered that the UK-Ghana remittance corridor is fairly competitive. However
it highlights that this will not continue to be the case if changes are not made. The
analysis shows that there are a number of significant weaknesses and challenges in both
the UK and Ghanaian markets that will seriously impede competiveness in the future if
not addressed. These will be a disadvantage to the consumers of remittances, the
Government of Ghana and money transfer operators (DFID, 2011).
Recent studies analyzing links between remittances and poverty in Ghana (2005)
suggest that raising remittance by 10 percent decreases the share of those in poverty by
3.5 percent and has a negligible impact on income inequality, as measured by the GINI
coefficient (Adams 2005). An earlier study (2003) of 74 low and middle-income
17
countries suggests that the impact of remittance flows on the poverty headcount might
be smaller on average (Adams and Page 2003). The point estimates for the poverty
headcount measure using survey mean income suggest that a 10 percent rise in share of
remittances in GDP will cause a 1.6 percent decline in the poverty headcount ratio
(people living on less than $1/day). The point estimate for the poverty gap and severity
of poverty (poverty gap squared) suggest that on average, a 10 percent rise in share of
remittances in GDP will cause a 2 percent decline in depth and severity of poverty. The
effects of remittances on poverty might be underestimated in the last study because in
measuring remittances, the large (and unknown) amount remitted through private,
unofficial channels is not included.
1.2
Statement of the problem
According to Maimbo (2006) advanced technology and more globalized world with
many internationalized business were the major causes for the idea to perform such
transactions (remittances) between two different countries to clear the transaction. The
increased number of migrants around the world such as workers or students who moved
from country to country increased the demand for a channel to receive or transfer funds
to their countries. The demand for ways to transfer funds has evolved when immigrants
started to transfer their funds through some agency or some informal channel to their
country of origin.
Due to the unprogressive red-tapesm by the formal sector a large portion of remittances
to Ghana are transferred through informal channels. This method reduces the potential
18
contribution of remittances to development - through financial sector deepening, credit
multiplier effects, savings, and investment.
In an environment whereby almost all the banks in Ghana are sub-agents to the same
international money transfer services, making it an arduous task to retain and ensure
loyalty of customers due to the high switching intentions of any unsatisfied customer.
Furthermore, this situation precipitates remittance flows outside the formal financial
sector thereby raising issues of money laundering and other financial crimes.
The statement of the problem is that lack of effective and efficient personal inward
remittance through banks in Ghana has led to the senders shifting to the informal
channels leading to a huge loss to the economy of Ghana.
The researcher is thus motivated to ascertain the factors that build money transfer
recipient confidence for receiving remittances using a particular transfer channel.
Inconveniences at Ecobank most at times as to do with frequent network problems,
delayed transfers, long waiting lines, and unfriendly service. Other issues such as
identification required to receive the funds and network limitation of the service were
also considered.
19
1.3
Objectives of the study
The main objective of the study was to investigate the effectiveness of personal inward
remittances through banks in Ghana using Ecobank Ghana Limited as a case study. The
specific objectives of the study were as follows:
1. To identify the different channels through which personal remittances are received
through Ecobank.
2. To determine the factors that influences the choice of the channel by remittance
recipients at Ecobank Ghana Limited.
3. To find the challenges that hinder remittances services for the point of view of
recipients and management at Ecobank Ghana.
1.4
Research Questions
1. What are the different channels through which personal remittances are received
through Ecobank Ghana?
2. What influences the choice of channel by remittance recipients at Ecobank
Ghana Limited?
3. What are the challenges that hinder personal remittances services at Ecobank
Ghana?
20
1.5
Significance of the Study
This study is an in-depth empirical investigation that seeks to probe the level of
efficiency of the operations of money transfer services by Ecobank. The motivation for
the study was prompted by the patrons of money transfer services with different views
which relate to the services they are looking for to transfer their funds based upon cost
preference to speed and any other criteria that affect the client‘s behavior toward
choosing the way to send or receive their funds through the banking system in Ghana.
The output of the study would contribute to knowledge and literature on the subject
under investigation. The study is immensely significant in diverse ways to
business/marketing practitioners, policy makers and stakeholders. To the management
of Ecobank, the findings and results of the study would provide a more reliable
scientific measure and perspective for describing and evaluating their operations.
Furthermore, the study would serve as an invaluable source of information that would
highlight the money transfer services being performed by the banks. It essentially
uncovered dimensions of money transfer services that banks considered as important.
The project provided empirical support for management strategic decisions in several
critical areas of their operations, and provided a justifiably valid and reliable guide to
designing
workable
service delivery improvement strategies for
creating and
delivering customer value, achieving customer satisfaction and loyalty, building
long-term mutually beneficial relationship with profitable customers and achieve
sustainable business growth in Ghana. The study also provides invaluable information
21
to the bank of Ghana for formulating, implementation, monitoring and evaluation of
policies relating to personal remittance to promote financial sector development .
To other stakeholders like investors, shareholders, employees, pressure groups,
consumer associations, etc., the study provided
invaluable information that
allowed them to provide useful suggestions for the improvement in the operations of
money transfer services in the banks in Ghana.
1.6
Brief Research Methodology
The researcher employed a methodology to achieve the objective of the study based on
both primary and secondary data with regards to the trends of performance of banks.
Furthermore, the researcher focused on the population, sampling, research instrument;
administration of semi-structured interview guide to management staff of the bank, for
information on the general perception of the impact of inward remittance services on
profitability using the non-probability sampling method of random sampling,
specifically, purposive and quota sampling.
Data was collected (via interviews and interviews for primary data) and were collated,
coded and analyzed using the appropriate statistical techniques such as distribution
tables, which culminated into bars and pie charts through the use of Microsoft Excel
Software. Furthermore information, such as specific comments and issues raised by
respondents, were analyzed and summarized into tables. Secondary materials were
22
extracted from relevant textbooks, newspapers, reports/articles, journals, bulletins,
documents and presentations.
1.7
Scope of the Study
The study is concentrated on the handling of personal remittances in Ecobank. A study
of this nature involves substantial funding and time as well, to be able to have wider
coverage. However, resource and time constraints did not permit nationwide coverage
with respect to all branches of the bank. Due to these constraints, the study was limited
to the Legon Branch, Head Office, Tudu and Elubo branches due to their strategic
location. Consequently, the result was generalized but its findings were placed in the
relevant context of the individual banks studied. The study covers operations of
Ecobank for the period 2005 to 2010.
1.8
Limitation of the Study
The research is limited by the scope of the study as the study could not be widened to
include all the stakeholders of Money Transfers.
Financial resources and time
constraints did not permit the researcher to consider a wide range of Money Transfer.
Besides, the limitation posed by the inadequate financial base of the researcher, another
limitation to the study was in the collection of the data for the study. Assess to
management was a big challenge to the researcher. Employees on the other hand were
skeptical about providing answers to the questionnaire even though they were assured
23
of total confidentiality. Much time was spent by researcher to retrieve most of the
questionnaire as most employees could not trace the questionnaire and in some
instances the employees had travel and could not be reached
1.9
Organization of the Study
This study is in five chapters. Chapter one is the general introduction. It covered the
background of the study, the objectives of the study and the statement of the problem. It
is also highlighted the scope, limitations and organization of the study. Chapter two
focused on the literature review. Literature was reviewed according to the research
questions used in the study. The theoretical foundations of the study were also
discussed. Chapter three discussed the research methodology and profile of the
organization. It explained the research design, gave details about the population, sample
and sampling procedures used in the study. It explained the research instruments,
methods of data collection and the data analysis plan. Chapter four covered the data
analysis and discussion and chapter five presented the summary, conclusion and
recommendations for the study.
24
CHAPTER TWO
LITERATURE REVIEW
2.1
Introduction
This chapter is devoted to the review of literature that relate to the concept of money
transfer its effectiveness, and the history of money transfer will be put forward to
constitute the basis for the study.
2.2
Concept of Money Transfer/Remittance
The definition of migrant remittances (as previously stated, person-to-person transfers
of resources cross-border or within-country) was a bit problematic because it was
difficult for almost all the Remittance Service Providers (RSP) to disaggregate
their
migrant remittances from certain other capital flows; hence, they provided the bulk
volumes. In addition, most of the RSPs lacked specific remittance units or departments
where data could be compiled and easily accessed. The gathering of data and other
information from RSPs in Ghana often required contacting various departments
separately because the RSPs lacked internal coordination on remittances, and this
contributed to delays in completing the questionnaire (Danquah Institute, 2011).
Although the introduction of universal banking in Ghana has enabled all the banks to
engage in remittance services, the traditional commercial banks have the advantage of
extensive branch networks and, therefore, more coverage. At the time of the survey, 22
25
banks and 4 nonbank financial institutions were authorized to process inward
remittances. The nonbank financial institutions include Money Transfer Organizations
(MTOs) and Ghana Post. Some of these institutions are also authorized to process
outward remittances. Various informal businesses also offer remittance services. Nine
banking institutions and two nonbank financial institutions responded to the
questionnaire and are included in the survey-a response rate of about 50 percent (BoG,
2009).
According to Danquah Institute (2011) remittances are often said to be the most
tangible and least controversial link between migration and development. A transfer of
funds is any transfer that the payer (sender) makes through a Payment Service Provider
(PSP) to make funds available for collection at another PSP if at any stage in the
process the money is moved electronically, for example, by email or fax. When a PSP
(or Money Transfer Operator) transfers funds they rules stipulate that they must
normally send information on the payer and payee (recipient/receiver) with the transfer.
This allows the authorities to trace payments if necessary and for economic managers to
be able to ascertain the impact of this important area of financial activity on a nation‘s
economy. Ecobank as a channel has paid out remittances after the necessary procedures
have been completed. This makes it easy for Ecobank to trace every transfer that has
passed through the bank.
Omer (2002) indicated that remittance system developed to fulfill the needs of migrant
workers and has followed immigration patterns from one region to another and can now
26
be found in most areas of the world. Remittance systems remain a significant method
for businesses and individuals to repatriate funds. The system is favored because it
usually costs less than moving funds through the formal banking system, it operates 24
hours and seven days a week, it is almost always reliable and it requires minimal paper
work. In remittance systems, funds are paid to an agent on one end in one country or
region and dispersed by another agent in a different country or region. In recent times,
Ecobank identified remittances of migrant workers abroad as relevant because of its
significance and contribution to the development of the individual and the nation as a
whole.
A key factor of remittance systems and one that is shared with formal or correspondent
banking is that the monetary value is moved from one location to another often without
the physical movement of currency. In many instances elements of legitimate regulated
financial services are employed, in other cases companies operate in secret and do not
maintain adequate accounts or records making regulation difficult if not impossible. In
all cases remittance systems rely upon some form of netting or book transfer procedure
to transmit value (Money Laundering Typologies, 2000).
This is an indication that, remittance system in Ghana is no exception. Monies are
secretly sent to Ghana without the necessary legitimate regulated financial services
leading to money laundering. There had been few cases of money laundering in Ghana
involving millions of dollars. Hence, some financial institutions in attempt to make
profits are prepared to be part of these illegal transfers to the detriment of the nation.
27
2.3
History of Money Transfer
According to Ezilon (2008), it was not always enough to earn money; people need to
transfer it to their intended places for several purposes. Though they relied on different
possible ways but searching for a way to create some effective money transfer
mechanism always overwhelmed our ancestors and they kept on trying to succeed. It
was in 1861, when the first transactional telegraph line, providing fast, Coast to coast
communications during the U.S Civil War broke the barriers. Followed by the same
inspiration, in1871, Money Transfer service was introduced in US. Ever since, money
transfer service has become one of the products fetching financial institutions a lot of
income in Ghana in particular and Africa in general.
2.3.1
Evolution-The lifecycle
Once they got the first idea for transferring money from one place to another, they never
looked back. Similar to all other business cycles, all the following stages of evolution,
revolution and innovation were covered within minimum time. In 1914, first customer
charge card was introduced which created a real charisma in money transfer system and
rapid money transfer became close to reality (Singh, 1999). According to Owens, John,
and Anna (2006) charge card gained vast popularity and within short period of time,
this great service was spread all over the world, especially in developed countries. The
next step was click and send thing, as world has become small global village. So,
everyone was cherishing something very instant. In 2000, online Money Transfer
system was introduced.
In Ghana, money transfer services have transcended the
financial institutions to the communication networks such as MTN and Tigo.
28
2.3.2
Revolution-breaking the barriers
In the early days, money transfer business was considered as an incredible business and
most of the activity was done by criminal world. Exchange rate was the motivation
between illegal money transfers. Apart from civilized people; most of the people
preferred to use this type of money transfer where a group of private individuals was
offering money transfer services in all the countries. They were considered quiet
reliable and good experiences of some of their customer‘s generated recommendations.
Money transfer business was successful but without credibility. Credible money transfer
companies were covered by the high exchange rates offered by non-bank transfers
(Singh, 1999).
Education, technology and awareness changed the way of thinking and with the internet
revolution, a new wave of money transfer services appeared on the scene. The real
creditability was given by companies like Western Union to this business and now
Money transfer business has been able to earn trust of customers at large (Ezilon, 2008).
2.3.3
Innovation - Nothing less than banking service
As Ezilon (2008) stated, the new millennium has opened new ways and with the
advanced technology, IT developments and the appearance of technology confidence
generation, Money Transfer companies have introduced incredible solutions. They have
also developed modified products by taking into account the different needs of different
customers in different parts of the world. Now, money transfer is carried out on really
scientific grounds. Money transfer business has also achieved equal sophistication and
29
technological advancement by following the path of banking sector. It was never easy to
transfer your money as it become today. It is just a ―Click & Send‖ manner. One has to
be careful when deciding about money Transfer channel to transfer their fund. Once
again, you have to care about the reliability of the channel before handling your hard
earned money and you will have good experience or sure (Ezilon, 2008).
Ecobank as a money transfer channel has used its technological advancement to make
money transfer very easy. In recent times the bank has increased its channels by
merging with The Trust Bank (TTB).
2.4
Money Transfer/Remittance in Ghana
Ghana has a long history of migration dating back to antiquity, and the internal
movement of people from one town to another has been an integral part of the culture
and economy. There has also been a long history of migration from Ghana to the West
African sub-region and the rest of the continent. This trend changed with time, however,
and migrant destinations eventually expanded to include Europe, North America, the
Middle East, and Asia, as figure 5.2 illustrates. Migration to the West African subregion, especially to Côte d‘Ivoire and Nigeria, has continued. Migrants were initially
skilled workers and professionals, but in the early 1980s, many unskilled workers also
migrated (Anarfi et al, 2003). This has made Ghana one of the highest receivers of
monies from abroad. The figures continue to increase daily as people travel every day.
Complete, reliable migration data about the numbers of Ghanaian emigrants are based
on differing definitions, assumptions, and time periods. The varying estimates have
30
included the following: In 2000, an estimated total of 906,698 Ghanaians (4.56 percent
of the country‘s population) lived outside Ghana (World Bank 2006); In 2006, an
estimated 189,461 Ghanaians resided in the 33 Organization for Economic Cooperation and Development member countries, representing less than 1 percent of the
estimated total population of 22.1 million (EU 2006). According to data from the
various country embassies in Ghana, an estimated 461,549 Ghanaians live in Europe
and North America, and 1 million more Ghanaians live in other African countries. On
this basis, Twum-Baah (2005) concluded that approximately 1.5 million. Ghanaians live
outside the country - not 3 million. However, this estimate excludes Ghanaians in the
Gulf States and Asia. Both the Ghana Statistical Service and the Ghana Immigration
Service lack data about Ghanaians living abroad. Recent data from the Ministry of
Foreign Affairs indicate that 107,487 Ghanaians were registered with Ghana missions in
33 countries, but the ministry estimates that this number exceeds half a million.
2.4.1
Internal Migration
Some authors have described Ghanaians as migratory (Caldwell 1969). Indeed, internal
and cross-border migration has long been a significant livelihood strategy for Ghanaians
(Kabki 2007). From all indications, internal migration began before independence (in
1957) and has continued ever since. The trend is notably a rural-to-urban shift, and
internal migrants represented 13 percent and 17 percent of the total population in 1960
and 1970, respectively. As of 2000, 27.4 percent of Ghana‘s 18.9 million people lived
outside their places of birth. Intra- and interregional migrants were 9.9 percent and 17.5
percent of the total population, respectively. North-south migration has been prevalent
31
in the country, in part because of the different ecological zones. In view of the heavy
dependence on small-scale agriculture, usually for subsistence, the long dry season
constitutes a lean farming season and provides an opportunity for many people in the
north to move southward to work instead of remaining idle in their localities. They
return at the beginning of the rainy season to resume their farming. This type of
migration is temporal, cyclical, and dominated by males.
According Kabki (2007), the types of internal migration observed in Ghana include
rural-to-urban, intra-rural, urban-to-rural, and intra-urban. The volume and intensity of
these movements keep changing and are influenced by the social and economic factors
that shape migrants‘ aspirations. The GLSS 4 results showed that rural areas receive
more than 60 percent of internal migrants; intra-rural migration, 32 percent; urban-torural migration, 35 percent; interurban migration, 23 percent; and rural-to-urban, 10
percent. Internal migrants maintain links with their hometowns. Even when they are
away, they contribute to the development of their indigenous communities through the
payment of levies and transfers.
It can be observed that migration may lead to a decline in family ties, but it rarely
removes migrants from their communities, and few Ghanaians would desire that. These
hometown connections are fostered through visits during funerals, festivals, and
marriage ceremonies. There is a view that if one migrates and does not return, then he
or she is ―aimless.‖Thus, the purpose of migration is to acquire wealth and experience
to benefit the hometown.
32
2.4.2
Remittance Sources
Most of the remittances to Ghana are sent by Ghanaian migrants living outside the
African continent, primarily from the United States and Canada (Quartey and Blankson
2004). In 2004, remittances received through money transfer institutions amounted to
almost $970 million - $665.7 million of which came from those two countries. The
United Kingdom is the third-largest source, with $163.3 million; followed by the
European Union, with $96.8 million; and other countries, which accounted for $25.1
million. The United Kingdom and European Union account for 18 percent and 14.6
percent of remittances to Ghana, respectively.
The Economic Community of West African States (ECOWAS) and the rest of Africa
accounted for $11.7 million and $7.5 million, respectively (Bank of Ghana 2004). Data
from the central bank show that the United States and Canada accounted for a combined
76 percent in 2005, 63 percent in 2006, and 59 percent in 2007 to 2010. The amount of
money sent from the United States and Canada has been decreasing over the three year
period, while figures from other regions are on the rise. Remittances from the United
States may have declined because of stricter laws regarding the transfer of money.
2.4.3
Characteristics of the Remittance Industry
Quartey (2008) captured that only transfers sent by migrants and received by relatives;
includes RSPs both in the formal sector (including commercial banks, money transfer
operators [MTOs] and in the Ghanaian postal service [Ghana Post]) and the informal
sector (nonfinancial institutions such as retail shops and travel agencies).
33
2.4.4
Types and Coverage of Remittance Firms
Private commercial banks, state-owned bank, Ghana Post, and MTO are the firms
engage in international remittances, and also exchange currencies for RSPs and for
domestic and international messaging services. About 36 percent of the firms receive
domestic remittances, provide domestic settlement services, and send international
remittances. Slightly fewer than 30 percent of the firms send domestic remittances and
provide cross-border settlement services. Currency exchanges are not allowed to
operate remittance services, but they do so informally because they have access to large
amounts of currency and can easily provide the services to their known clients (Quartey,
2006).
The private commercial banks and Ghana Post, operate in partnership with MTOs such
as Western Union, Vigo Money Transfer, and Money Gram. However, partnerships
between MTOs and mobile phone companies or other telecommunications service
providers are virtually nonexistent in Ghana. All the firms indicated that these
partnerships are not exclusive and that they were free to engage in other arrangements.
Although all of the firms in partnerships have access to the remittance payment
infrastructure through the MTO partner (for example, Western Union or Vigo), they all
do not have access to the distribution network and currency exchange.
Most of the financial sectors RSPs are in major urban areas. The ARB Apex Bank
caters to the rural population through the rural banking network and collaborates with
some of the nonbank financial institutions such as the MTO Express Funds
34
International, which has a market share of 34 percent. Because Express Funds
International has six main branches in the country, its partnership with ARB Apex Bank
is important to reach Ghana (Quartey, 2006).
However, most of the private commercial banks also have branches in the rural areas.
Ghana Post offers remittance services in partnership with Western Union. Its core
business enables it to provide wide coverage through about 96 branches in the urban
and rural areas. Firms in partnership with Western Union receive 20 percent of the
commission on remittances, although this percentage varies depending on the source
country. Firms partnering with Money Gram receive about 13 percent of the pretax
profit plus 3.5 percent of the commission on remittances (Quartey, 2006).
2.5
Remittance Instruments
Electronic funds transfer is the most popular instrument for remittance transactions and
is used by all the RSP firms. The majority (9) receives commissions through partnership
arrangements with MTOs. According to Quartey (2006) most of the financial
institutions use account-to-account transfers, bank (floats or loans), and cheques. Others
use prepaid debit cards or money orders.
In Ghana, the use of money transfers through mobile phones and prepaid cards for use
at designated retailers remains a gray area, and none of the firms reported using those
instruments. Even though there is widespread access to mobile phones, people generally
use them for calls; banking-by-phone use is limited, possibly because the technology is
35
not trusted and customers need more time to get accustomed to it. Most financial
institutions also do not use Internet transfers because Ghana has a low Internet
penetration rate. However, completion of the fiber-optic backbone will reduce the cost
associated with the Internet, and this model might become more common in the future.
2.6
Access to Other Financial Services
The banking institutions use remittance transfers as an opportunity to sell formal
banking products to customers. They offer deposits and savings products to both
senders and recipients of remittances. This practice is to be expected because banks
usually want more customers, and they believe that convincing customers to open a
savings or other current account is easier than advising them to obtain a loan or buy
insurance products. Some nonbank financial institutions, in addition to remittance
services, also provide deposit and savings products geared toward remittance receivers
and senders, including low-end insurance and credit facilities for consumption purposes.
The state-owned banks are reported using revenue from selling other financial products
to subsidize their remittance services (Quartey, 2006).
Express Funds International noted that it helps both senders and recipients of
remittances gain access to investment opportunities by providing advice on Treasury
bill and mutual fund rates. The company also offers its customers a service package
called ―MyMorgan Services,‖ which allows a sender to allocate remittance funds to a
specific purpose in Ghana – such as purchasing real estate or paying hospital bills or
school fees - on behalf of a designated beneficiary and even to invest in financial
36
instruments such as Treasury bills, mutual funds, and certificates of deposit. This
product is popular among Ghanaian migrants in the United Kingdom (Twum-Baah,
2005).
2.7
The Regulatory and Business Environment
Ghana‘s current laws and regulations present no major challenges to business activities,
specifically in remittance transmission. The firms perceived these laws as a minor
obstacle, albeit, the financial sector reforms have made it easier for institutions to
engage in remittance services if they meet the regulatory requirements. Private
commercial banks and the state-owned banks pay no fee to conduct cross-border money
transfers. Ghana Post, by its articles of incorporation, is permitted to provide money
transfer services, but because it is not a bank, it pays a $10,000 annual fee to conduct
cross-border money transfers. Ghana Post noted that, to fulfill anti-money-laundering
(AML) requirements, the central bank limits currency exchange holdings and
remittance inflows. This may also account for why some banks cited AML laws as a
significant obstacle to their remittance service businesses. By central bank directive, no
cash exceeding $10,000 can be brought into the country without demanding for the
purpose of funds. Several RSP firms file currency transaction reports with the central
bank and that the reports are required for any amount; they report suspicious activities
to the central bank as the regulatory authority (Quartey & Blankson, 2004).
37
2.8
Barriers of Entry
According to Mohapatra and Ratha (2011), the primary regulatory burden for any RSP
firm is the central bank‘s ¢7million minimum capital requirement. Access to financial
infrastructure, a distribution network, and capital are considered as barriers to starting a
remittance service business. Because these requirements are all within the service
provider‘s domain, any provider that can satisfy them would not find obtaining a license
to be difficult. The RSPs ranks AML laws, licensing regulations, and capital
requirements as the most significant barriers to entering the remittance business; they
did not perceive exchange control requirements to be a significant barrier. In addition,
firms are not typically required to charge taxes on remittance services, rendering tax
policy a relatively low entry barrier as well.
2.8.1
Competitive Factors
Competition from informal RSPs has been significant obstacle to business activities.
However, the major competitors within the sector has been the banks and nonbank
financial institutions
2.8.2
Remittance Fees and Identification Requirements
Ghana‘s laws and regulations governing remittance services are progressive and, in
general, do not present significant barriers to the RSPs‘ business operations. However,
formal sector remittance fees and identification requirements may create a preference
among migrants for informal RSPs.
38
Informal RSPs typically know their clients personally and are thus more likely to waive
identification requirements. Exchange rate volatility also might increase customers‘
preference for informal channels. Because remittances that pass through the formal
channels are always paid to the recipients in the local currency (Ghanaian cedis),
recipients believe they lose money in the conversion because the MTOs use lower
exchange rates than the prevailing market rate. The informal channels sometimes pay
their clients in dollars because the money is sometimes sent through someone traveling
to the country.
2.8.3
Remittance service fees
Remittance fees are normally paid by the senders if funds are received in Ghanaian
cedis. Money transfer charges, however, depend on the RSP. Most of the providers
refused to disclose their transfer fees for strategic reasons, but according to a Bank of
Ghana (2004), transfers through smaller (national) companies cost between $1.50 and
$3.00 for every $100.00 sent. The BoG revealed that sending fees are 1.5–2.5 percent of
the amount sent if transmitted through a commercial bank and 2.0–3.5 percent of the
amount sent through nonbank operators such as Western Union.
However, Express Funds International notes that for every $200 sent from the United
Kingdom or the United States, the average fees are 4 percent and 5–6 percent,
respectively. Within the informal sector, remittance service fees are difficult to quantify
and depend on the agreement between the sender and the agent bringing the money into
the country. There are typically no commission charges (Bank of Ghana, 2004).
39
2.8.4
Identification requirements
The financial institutions offering remittance services always require identification
documents - a requirement that prevents poor households from using the formal sector.
People with little means can afford neither the time nor expense to obtain a passport or a
drivers‘ license. However, the most recipients use the voter‘s identification card that
was issued as a form of identification when receiving a transfer.
2.9
The Money Transfer Market
The money transfer industry comprises a vast array of players for both international and
domestic payments. In 2001, worldwide cross-border payments exceeded US$330
trillion; this is projected to grow to $604 trillion by 2011. As of 2001, domestic
payments worldwide were estimated at $1,447 trillion. They are expected to increase to
$2,417 trillion by 2011 (Boston Consulting Group 2003).
The flows of international transfers from migrants, or international remittances,
historically have been uncounted and even ignored in official statistics. In 2006,
officially recorded statistics from central banks estimated that international migrant
remittances reached $206 billion. However, it is widely recognized that the actual flows
might be undercounted by 50 percent. A 2007 independent study by the multi-donor
Financing Facility for Remittances (FFR) estimates that in 2006 the overall
international remittance flows (both formal and informal) to developing countries
reached $300 billion, suggesting more than 1.5 billion transactions of $100, $200, or
$300 at a time. By all accounts, available data indicate a very large market Remittances
constitute one of the largest sources of external funding for developing countries, in
40
most cases dwarfing the amount of official development assistance (ODA). Figures for
2006 show that, international remittances to Africa totaled US$38 billion, the equivalent
of all foreign direct investment (FDI) to Africa. Remittances were the equivalent of 80
percent of all FDI flows to developing countries in Eastern Europe. Likewise,
remittances were a significant portion of GDP for Asia ($114 billion), LAC ($68
billion), and the developing economies of the Near East ($28 billion).
Such staggering global volumes, remittances, and other types of money transfers are
attracting increasing attention from the private sector, governments, and development
agencies. The money transfers market includes all types of customers, including
individuals, businesses, and governments. For both international and domestic money
transfers, clients from all levels of society use a variety of services, including formal,
highly regulated channels and informal, unregulated ones (Isern, Deshpande, and van
Doorn 2005).
Money transfers are used by people for many purposes: from everyday bill payment, to
one-time-only money needs, to delivering money from people in more-developed
countries to families back home (remittances).
41
Figure 1: Money Transfer Market
Source: Adapted from Funding Facility for Remittances 2007.
According to funding for facilities (2007) large countries receive more remittances in
raw volume, but small countries receive the most in remittances with respect to their
GDP.
Among money transfer products, international remittances have received the most
attention. The top three recipients of international remittances in 2006 were India
(US$24,504 million), Mexico ($24,354 million), and China ($21,075 million). But
smaller countries top the list when comparing remittances to national GDP: GuineaBissau (48.7% of GDP), Sao Tome and Principe (39%), Eritrea (37.9%), and Tajikistan
(36.7%). Based on new data developed by FFR, a majority of countries in most
developing regions show annual remittance inflows of more than $1 billion: Asia and
Oceania (17 countries), LAC (13 countries), Europe (12 countries), and the Near East (9
countries). A further 18 African countries received more than $500 million in formally
42
documented international remittances (Funding Facility for Remittances 2007). Wealthy
countries and economies in transition are the main source of remittances to developing
countries, as seen in Figure 2. The United States is by far the largest source, with
approximately US$95 billion in outward flows, followed by Germany and the Russian
Federation. It is conventionally believed that migration flows are from south to north
and that remittance flows are from north to south. However, south-south migration is
actually estimated to be at least as large as south-north migration, and south-south
remittances account for 30 to 45 percent of the remittances received in the south (Ratha
2005).
Further, migration within countries, especially from rural to urban areas, is growing
globally. As one example, approximately 100 million people were recorded officially as
domestic labor migrants in China in 2005 (Cheng and Xu 2005).
International remittances are qualitatively different from other sources of development
finance. They are both relatively stable and countercyclical in nature, because migrants
tend to remit more during periods of economic downturn in their home countries.
Because remittances represent private money sent person to person, they benefit lowincome people directly—and on demand. International MTCs have long dominated the
global market, but smaller regional and national providers are beginning to explore the
market potential (Isern et al., 2005).
43
While international remittances and other transfers represent a sizeable market, the
potential for money transfers is even broader when domestic money transfers are
considered. In many countries, domestic money transfers are growing rapidly as more
countries develop national electronic payment infrastructure. For most MFIs, offering
domestic money transfers represents a significant opportunity that may have fewer
hurdles than international transfers (Isern, Deshpande, & van Doorn 2005).
The money transfers industry is changing rapidly. Some of the most important changes
over the past five years include the following: Increased competition among formally
licensed MTCs as new firms have entered the international, regional, and national
markets; better use of existing payment instruments, such as card, phone, and Internetbased payments; lower fees for money transfers as a result of increased competition. For
example, in Latin America, the cost of sending US$200 internationally is estimated to
have dropped from over 15 percent to less than 5.6 percent from 2001 to 2005 (Orozco,
2006). Other international and national markets are also beginning to see price
reductions, and this has implications for MFIs that seek to enter the market.
The money transfer market offers tantalizing opportunities for MFIs to attract new
clients, increase existing client loyalty, and earn additional revenue. However, MFIs
must proceed with caution in evaluating the potential for money transfers. They should
learn from the experience of institutions that have already launched them.
44
Forming an alliance with a proven MTC may be the best approach for MFIs just
entering the market, especially for international money transfers. MFIs‘ customer base,
location, and existing distribution infrastructure can make them attractive partners for
MTCs. In return, the international payment networks, foreign exchange access, and risk
management expertise of MTCs can reduce both the cost and risk of MFIs‘ entry into
the market. The domestic money transfers market is a prime market for MFIs. The
industry is just starting to grapple with more reliable information on international
money transfers, but very little information is available on domestic transfers.
Nonetheless, it is clear that the volume of domestic money transfers, including personto-person remittances, is multiple times larger. Institutions with nationwide coverage
are well placed to offer domestic transfers. While many of the same challenges apply,
domestic transfers can be considerably easier to launch and manage than international
transfers.
2.10
The Financial Sector in Ghana
Ghana has been pursuing financial sector reforms to enhance financial development
since 1983. To facilitate the reform process, the country passed laws such as the
P.N.D.C. Law 225 in 1989 and later the Banking Act (Act 673) in 2004. The reform
also liberalized controls on interest rates and bank credit. As part of the process of
liberalization, the Bank of Ghana introduced ―universal banking‖ in the first quarter of
2003. Universal banking allows banks to undertake commercial, development,
investment, or merchant banking without the need for separate licenses. The enactment
of these laws added depth and diversity to the financial system (Gockel, 2003).
45
To further deepen the financial system, the country enacted the Foreign Exchange Act
(Act 723) in December 2006. This Act, which replaced the Exchange Control Act of
1961, partially liberalized the capital account. Among its provisions, it allowed for the
repatriation of funds from Ghana without prior central bank approval and allowed
nonresidents and foreigners to open currency exchange accounts in Ghana. The Act also
regulates currency exchange businesses and provides for related matters. To reduce
overdependence on cash-based transactions, the Bank of Ghana also is undertaking
reforms in the legal, institutional, and infrastructural framework of the payments system
to make the Ghanaian financial system modern and competitive. As part of this process,
the bank has implemented the real-time gross settlement (RTGS) system for high-value
payments. The RTGS has helped create an environment for safe, sound, secure, and
timely payments. It has also reduced systemic payment and settlement risks because
payment orders are settled almost instantaneously (World Bank, 2006).
According to Bank of Ghana (2008) in order to complement the RTGS, the Bank of
Ghana introduced a paper-based credit clearing system to facilitate the settlement of
low-value payments. The bank plans to migrate these settlements to an electronic
platform in the near future. The bank also established a National Switch (E-Zwich)
payment platform and ATM network to establish a common platform for all payment
transactions within the country. This common platform would result in the integration
of all existing bank switches and allow banks without switches (such as ARB Apex
Bank) to join the common switch at low cost. It would also enable the interoperability
of all ATMs and the settlement of payment transactions by customers of different banks
46
at points of sale. The introduction of these technological advancements in the financial
system would make remittance transfers much more flexible and encourage the use of
technology by senders and recipients.
2.11
Conceptual Framework
A conceptual frame work as defined by Miles and Huberman (1994), is a written or
visual presentation that explains either graphically, or in narrative form, the main things
to be studied – the key factors, concepts or variables and the presumed relationship
among them.
A conceptual framework is described as a set of broad ideas and principles taken from
relevant fields of enquiry and used to structure a subsequent presentation (Reichel &
Ramey, 1987). When clearly articulated, a conceptual framework has potential
usefulness as a tool to scaffold research and, therefore, to assist a researcher to make
meaning of subsequent findings. Such a framework should be intended as a starting
point for reflection about the research and its context. The framework is a research tool
intended to assist a researcher to develop awareness and understanding of the situation
under scrutiny and to communicate this. As with all investigation in the social world,
the framework itself forms part of the agenda for negotiation to be scrutinized and
tested, reviewed and reformed as a result of investigation (Guba & Lincoln, 1989).
In their study Guba & Lincoln (1994), defined conceptual framework as ―a network‖, or
―a plane,‖ of interlinked concepts that together provide a comprehensive understanding
47
of a phenomenon or phenomena. The concepts that constitute a conceptual framework
support one another, articulate their respective phenomena, and establish a frameworkspecific philosophy. Conceptual frameworks possess ontological, epistemological, and
methodological assumptions, and each concept within a conceptual framework plays an
ontological or epistemological role. The ontological assumptions relate to knowledge of
the ―way things are,‖ ―the nature of reality,‖ ―real‖ existence, and ―real‖ action (Guba &
Lincoln, 1994). The epistemological assumptions relate to ―how things really are‖ and
―how things really work‖ in an assumed reality (p. 108). The methodological
assumptions relate to the process of building the conceptual framework and assessing
what it can tell us about the ―real‖ world.
With the conceptual framework illustrated below the researcher will attempt to describe,
explain and establish patterns of relationships between variables
48
CHAPTER THREE
RESEARCH METHODOLOGY
3.1
Introduction
This study assessed the personal remittances channels through banks in Ghana. This
research work is to identify the different channels through which personal remittances
are received through banks and the factors that influence the channels by remittance
recipients. To achieve this, methods and procedures such as research framework,
population, sample size, sample technique, data collection instruments and methods
were used to derive data for the research work.
3.2
Research Design
This research is a case study type. The researcher used a case study because it allows
her to specifically identify issues related to the research topic. It is also appropriate for
individual researchers because it gives an opportunity for one aspect of a problem to be
studied in-depth within a short period. The researcher identified the problem of large
portions of remittances to Ghana are transferred through informal channels, collected
data, through questionnaires and interviews, analyzed the data and made
recommendations.
49
3.3
Population
For the purposes of this research the population of study comprises of management of
Ecobank and staff of Ecobank as well as individual clients of the bank. The choice of
individuals is because they constitute the biggest segment of Ecobank‘s clientele
coming from different backgrounds such as the civil and public services, private sector,
self employed and some unemployed but viable clients. The estimated population for
the study was two thousand, two hundred and fifty (2250).
3.4
Sample Size
Sample sizes of two hundred and sixty (260) respondents out of the entire population of
2250 were selected for the research. For purposes of this research three (3) management
staff of Ecobank were selected given that they were only a handful and their inputs
considered very vital. Fifty-seven (57) staff of the non-managerial grade and two
hundred (200) clients were selected using the simple random sampling technique. The
objective was to have a fair and credible representation of respondents who are
stakeholders in Ecobank.
The number is considered adequate, and representative (Henry, 1990) enough to give
informed answers to the research problem. To ensure that all the various groups in the
sampling frame are surveyed, the stratified sampling technique or approach was used at
the first stage of the selection exercise. This conforms to the ideas of (Patton, 1990;
50
Saunders et al 2007; Bradshaw and Stratford, 2000) who explain that stratified sampling
ensures the selection of respondents from all the identifiable sub-groups within the
sample population because of their varied knowledge or areas of expertise on the
research topic or problem.
3.5
Sampling Techniques
The sampling techniques used in this study were purposive and simple random
sampling. The purposive sampling was adopted because the intension was to gain an
insight into the customer service phenomenon, hence the need to choose personnel who
are well versed in the industry.
The same sampling technique was used to select which branch of the organization to
visit for the study. For the purposes of this study the Head Office, Legon Campus and
Tudu branches located in Accra were selected. The Elubo branch in the Western Region
was also selected. These branches have been selected because of their strategic location
and the role they play with transfers and remittances. Head Office has the highest
customer based in terms of remittances and transfers. University of Ghana branch
serves the university community and foreign students who receive remittances from
parents for school fees and daily upkeep. Tudu branch is located in the business centre
of Accra where customers from neighboring countries come to transact business and
therefore receive remittances and transfers from the branch. Elubo branch is located
51
close to the Ivory Coast Boarder.
Customers from both Ghana and Ivory Coast patronize the branch for remittances and
transfers. Furthermore, simple random sampling was important to the study, since the
study intended to ensure some randomness and representativeness in the sample. The
selection of the respondents for the study is guided by sampling procedure: the process
involving sampling frame identification and the determination of relevant sample size.
At the targeted branches, stratified random sampling was used to select staff for the
study. This is guided by the structure of leadership that is in use by the organization at
the Head Office. This method of sampling therefore ensures that staff in the clerical,
supervisory and managerial categories is interviewed.
The respondents were chosen from all the classified customer groups: salaried workers
and retail clients using the simple random sampling method. This is intended to ensure
representativeness in the sample.
A detail of the sample size is illustrated in Table 3.1 below.
52
Table 3.1 : sample size and technique for selecting respondents
Sample Method Required
Data
Target Group
Estimated Sample
Collection
Number
Selected Tool
Non-Managerial
200
57
Questionnaire
Top Management
10
3
Interview
Individual Customer
1,536
200
Questionnaire
Total
2,250
260
Staff
Customers
Sources: field research (2012) - Head Office, Legon, Tudu and Elubu Ecobank
branches
3.6
Sources of Data
Both secondary and primary data were collected for the purpose of this research. For
clarity, Saunders et al, (2007) define data as facts, opinions and statistic that have been
collected together and recorded for reference or for analysis.
3.6.1
Secondary Sources of Data
Secondary data for the research was collected by publications, industry reports, internal
records of Ecobank, newspapers etc. to gather historical perspectives of the research
data from renowned authors and researchers.
53
3.6.2
Primary Sources of Data
Primary sources of data is that data that is used for a specific purpose for which it was
gathered. For this study, it was obtained by administering questionnaire to respondents
with the help of field assistants and colleagues due to time constraints and the
geographical area of coverage. Structured interviews were held with the selected
Managers (Heads of Department) at Ecobank.
3.7
Data Collection Method
There are various methods by which both secondary and primary data are obtained.
Saunders et al, (2007) list questionnaire, interviews (semi-structured, in-depth and
group) and observation as methods that are usable. For this research the methods that
employed were surveys and interviews. The instruments that were used for collection of
relevant data for the study was the questionnaire and the semi- structured interview
approach.
3.7.1
Questionnaire
This research instrument is a compilation of structured questions which were given to
respondents for their completion or responses. The questions were close-ended
multiple-choice questions giving respondents a choice from a range of answers based on
the 5- point Likert-style rating scale. They had choices either to agree or disagree with
the statements made within the range. This ensured that the choice of answers directly
54
addressed issues at stake and made collation and analysis of the data simple. On the
scale 1 is the lowest score and 5 the highest.
3.7.2
Interview Guide
In-depth interviews were held with the managerial staff of Ecobank to solicit answers,
opinions and suggestions on the study because of the peculiar knowledge they possess
on the subject under study. This involve the use of semi-structured open-ended
questions to allow for free but brief expression of relevant ideas, opinions and
suggestions that might not be captured by the closed- ended questions. Each interview
lasted for ten (10) minutes since the managers have very busy schedules and little time
to spare.
3.8
Data Analysis
The raw data obtained from a study is useless unless it is transformed into information
for the purpose of decision making (Emery & Couper, 2003). The data analysis
involved reducing the raw data into a manageable size, developing summaries and
applying statistical inferences. Consequently, the following steps were taken to analyze
the data for the study. The data was edited to detect and correct possible errors and
omissions that are likely to occur, to ensure consistency across respondents.
The data were then coded to enable the respondents to be grouped into limited number
of categories. Statistical Package for Social Science (SPSS) and Microsoft Excel 2007
55
were used for this analysis. Data was presented in tabular form, graphical and narrative
forms.
In analyzing the data, descriptive statistical tools such as bar graph
complemented with mean and standard deviations were used.
3.9
The Company Profile
Ecobank Ghana Limited (EGH) was incorporated on January 9, 1989 as a privately
limited liability company under the Companies Code to engage in the business of
banking. EGH was initially licensed to operate as a Merchant Bank by the Bank of
Ghana on November 10, 1989. It commenced business on February 19, 1990. EGH has
grown consistently over the years to become one of the leading Banks in Ghana and a
well-recognised brand in the Ghanaian banking industry. EGH acquired a universal
banking license in 2003 and has since expanded its geographical reach and broadened
its scope of financial services.
At an Extraordinary General Meeting held on February 8, 2006, EGH‘s shareholders
adopted a special resolution to convert the Company into a Public Company Limited by
shares in furtherance of its plan to undertake a public floatation. EGH is a subsidiary of
Ecobank Transnational Incorporated (ETI), a bank holding company which currently
has thirty (30) affiliates across West, East and Central Africa as well as representative
offices in South Africa, Angola, Dubai in UAE (for the Middle-east market), China (for
the emerging Asia market) and France (for the European market). ETI also has
subsidiaries across the sub-region namely: Ecobank Development Corporation (EDC) in
56
Ghana, Nigeria and Cote D‘Ivoire and eProcess International SA (in Ghana and Togo)
which provides ICT services across the group as well as to other external institutions.
Ecobank is therefore present in 35 countries.
EGH itself currently has four wholly-owned subsidiaries, which offer a variety of nonbanking financial services to complement EGH‘s broad range of banking services. The
subsidiaries are Ecobank Investment Managers Limited, Ecobank Venture Capital CO.
LTD, Ecobank Managed Funds and Ecobank Leasing Company Limited. The bank has
51 branches countrywide with 11 of the branches in Kumasi and 27 in Accra, the capital
of Ghana. In addition, the bank has 1, 1, 1, 7 and 3 branches respectively in Volta,
Eastern, Northern, Western and Brong-Ahafo Regions
The bank though relatively
young, is a key player in the banking industry and is rated as the fourth largest bank in
Ghana in terms of assets.
EGH has won the Corporate Initiative Ghana (CIG) award for six consecutive years and
in 2005 won the Chartered Institute of Marketing Ghana (CIMG) award for the overall
best Bank in the country. It was also adjudged the 1st runner up for corporate social
responsibility during the awards organized by the Corporate Initiative Ghana.
Ecobank as a Corporate Initiative of Ghana, is an innovation oriented bank which
through research and interaction with customers displays innovation as a response to the
changing needs of the public, such as, the recent introduction of the first Credit Card
service on to the Ghanaian Financial Market, in response to customers demand for such
57
product which has existed many years in the advanced economies. This also attempts to
meet the expectation of central bank‘s campaign with the use of monetized systems
instead of cash for business transactions.
Ecobank mission is ‗to provide our retail and wholesale customers with convenient,
accessible and reliable financial products and services. The bank‘s vision is to build a
world-class Pan-African bank and contribute to the economic development and
financial integration of Africa. In line with this EGH seeks to create a unique Ghanaian
institution through a determined focus on its customers, employees and shareholders
and an absolute commitment to the achievement of excellence in the delivery of
financial services. The bank therefore seeks to apply the following principles to its
business decision and conduct:

Treat each customer as a preferred customer – 2012 has been declared the year
of the customer.

Invest in training and development of its staff.

Deliver products and services which respond to and exceed customer
expectation.

Develop markets and products to maintain the bank‘s competitive advantage.

Deliver superior returns to its shareholders.

Maintain high standard of ethics and regulatory compliance at all time.
(Ecobank Ghana Limited – Full Prospectus, May 15, 2006).
In December 2011, Ecobank Transnational Incorporated (ETI), the parent company of
Ecobank Ghana, acquired a 100% share in The Trust Bank (TTB) in a deal estimated at
58
about US$135million. The merger promised to make the enlarged business Ghana‘s
biggest bank in terms of assets and profitability. The acquisition will potentially
position Ecobank to become the biggest in terms of assets and the most profitable bank
in
the
country.
Ecobank Ghana for the past five years has achieved a cumulative average growth rate of
31 percent in its profit before tax, while its total assets have been growing by 29 percent
– with customer loans and deposits growing by 25 and 27 percent respectively.
Instructively, by the end of the third quarter of 2011, Ecobank had total assets of
GH¢2.2billion, emerging as the second-biggest bank after Ghana Commercial Bank. It
also posted a profit before tax of GH¢79million, becoming the second-most profitable
bank after Standard Chartered Bank Ghana.
The combined capital of the two banks will now total US$ 225million; hitherto
Ecobank had US$160million while TTB had US$65million. The enlarged business will
now have the highest single obligor limit in the industry, which allows for increased
lending.
The following are the benefits of the merger:

The enlarged Ecobank Ghana becomes No. 1 in terms of assets and No. 1 in
terms of profitability out of 26 banks operating in Ghana as at June 30, 2011.

Shareholders would have maximized their earnings potential in one of the
countries accounting for the large banking revenue pools in Africa.
59

The enlarged entity will have the ability to finance big ticket transactions
(particularly oil and gas).

The enlarged entity increases the bank‘s Single Obligor Limit (SOL) from
approx. GHC 62 million to over GHC 90 million.

The new entity will have an enhanced treasury base and stronger bargaining
power for rates

The enlarged bank will have a wider geographical presence, with a stronger
branch network for unrivalled competition

The new Ecobank Ghana will have a harmonized strong corporate (EGH) and
strong retail (TTB) banking businesses, which will offer customers better
operating systems and improved services.

Enhanced shareholder value through improved financial performance.
60
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSION OF RESULTS
4.1 Introduction
This chapter deals with the data analysis, discussions and fallout from administered
questionnaires, the use of descriptive statistics and chart was employed to convey the
needed information for the study. The discussion draws on theories and other related
literature on the main concepts of the study for a holistic understanding of issues raised
from the field. The result and discussion are based on the following considerations:
Background information of respondents, Channels through which personal remittances
are received, Factors that influence the choice of the channel by remittance recipient
and Challenges that hinder remittances services from the point of view of recipients and
management of Ecobank Ghana Limited
The analysis of result and discussion is presented in two parts. Part 1 deals with the
perspectives from the point of view of customers who receive remittance through
Ecobank Ghana Ltd. Part 2 of the analysis and discussion captures views and
perspectives of staff and management of Ecobank Ghana Ltd with respect to money
transfer operations and its associated challenges.
61
Frequencies, percentages, pie charts and bar charts were used for analyzing the data
gathered from the money transfer recipient also known in the study as respondents.
A. Analysis of Responses
4.2 Background of Respondents
The background information considered for the study includes age, gender, educational
background and occupation. The background information was considered essential to
determine respondents‘ influence on a choice of transfer channel.
4.2.1 Age of respondents
The age groupings as obtained are shown in Table 4.1. Out of two hundred (200)
respondents interviewed 46 (23.0%) were within the age bracket 20-30 years, 49
(24.5%) were within the age bracket 31-40 years and 48 (24.0%) were within the age
bracket 41-50 years. Again, 45 (22.5%) of the respondents were found within the age
range 51-60 years and 12 (6.0%) were found to be more than 60 years.
The table 4.1 shows that age range of 31-40 constitute the highest followed by age
range 41-50, 20-30 and 51-60. Those above 60 years recorded the least number of
respondents. The age groupings 31-40 and 41-50 constitute the highest respondents; and
considered to be the most active and productive group. It therefore could mean that
remittances receive by these age groupings could be their salaries or consultancy
services offered. The third highest age group was those within the range of 20-30 years.
62
This age group is considered relatively young in the Ghanaian context and may be
dependent on their parents or guardians for financial support. This was evident as
majority of respondents interviewed at University of Ghana branch were students. The
least respondents were those above the age of 60 years. It means that those respondents
probably receive remittances from their children for their daily upkeep or for projects.
Table 4.1: Age distribution of respondents
Age Grouping
Frequency Percentage (%)
20-30 years
46
23.0
31-40 years
49
24.5
41-50 years
48
24.0
51-60 years
45
22.5
Above 60 years
12
6.0
Total
200
100
Sources: field survey July, 2012
4.2.2 Sex of respondents
Table 4.2 presents sex distribution of the respondents interviewed for the study. The
table indicates that out of the two hundred (200) respondents, 55.5% (111) being
majority were males. Eighty nine (89) of the respondents representing 44.5% were
females.
There are several possible reasons for relatively high incidence of male recipients. One
explanation suggests that there may be a higher rate of male migrants from rural to
63
urban locations, who pick up remittances and then send them on to rural relatives.
Another theory is that males may be chosen to go and pick-up remittances for security
reasons, even though they may not be the final recipient. Study by Debnath and Selim,
(2009) indicates that married women whose husbands have travelled abroad rely on
their in-laws or other extended family members for financial resources and therefore
whenever the husband sends money, it is done in the name of his parents or other (often
male) relatives rather than to his wife.
Table 4.2: Sex distribution of respondents
Sex of Respondents
Frequency Percentage (%)
Male
111
55.5
Female
89
44.5
Total
200
100
Sources: field survey July, 2012
4.2.3 Educational background of respondents
The educational level of respondents as a variable was to find out the educational
background so as to make meaningful deductions as to who they really were. The
educational level of respondents is presented in Figure 4.5. The result is given in
percentage and indicates that 31%, 27%, 22%, 16% and 4% hold professional,
university, diploma and middle/basic certificate respectively. Respondents with
professional level of education recorded the highest percentage and remittances receive
64
could be as a result of consultancy services rendered or as salaries. Those with
university level of education may probably be students who receive money from parents
or guardians for their upkeep.
Figure 4.1: Level of Education of respondents
Sources: field survey July, 2012
4.2.4
Occupation of respondents
Figure 4.2 shows the occupations of respondents selected for the study. Majority was in
other professions mainly of civil and public services and accounted for 35% of the
respondents. This was followed by professionals in various professions as accountants,
lawyers, and academicians; these also accounted for 25% of the respondents. Self
65
employed respondents also constituted 23.33% whereas students at various levels also
constituted 16.67%. This finding shows the inclusion of all manner of individuals of
various occupations in the study.
Civil, public servants and professionals (accountants, lawyers, academicians, etc)
making the lion share of the study indicate that those respondents are high caliber of
people in society with high educational background have both local and international
links to consultancy services. Remittances receive by those respondents may be as a
result of wages or fee from such services. According to Trading Economics, the
Workers' remittances and compensation of employees; received (% of GDP) in Ghana
was last reported at 0.43 in 2010, according to a World Bank report released in 2011.
The Workers' remittances and compensation of employees; received (% of GDP) in
Ghana was 0.44 in 2009, according to a World Bank report, published in 2010. The
Workers' remittances and compensation of employees; received (% of GDP) in Ghana
was reported at 0.44 in 2008, according to the World Bank.
Remittances receive by those respondents who are schooling could be monies
transferred by parents and guardians in support of their education.
66
Figure 4.2: Occupation of Respondents
Sources: field survey July, 2012
4.3
Channels through which personal remittances are received
This is the official channels which utilizes Money Transfer Operators (MTOs) or
Remittances Service Providers (RSPs) such as Western Union, Money gram, Raid
transfers, SWIFT (Society for worldwide interbank financial telecommunication) and
others.
The objective of this question was to determine channels used by customers of Ecobank
who receive personal remittances. From the study it was revealed that Ecobank Ghana
Limited uses four main transfer channels, namely Western Union, Money Gram,
SWIFT and Rapid Transfers.
67
From Table 4.3, 35% (70) of the respondents interviewed received remittances from
Western Union through Ecobank Ghana Ltd. whilst 8.5% (17) received remittances
through Money Gram. SWIFT Transfer recorded 45% representing 90 of the
respondents, with Rapid Transfer recoding 11.5% being 23 of the respondents.
Table 4.3: Channel for Transfer of Money
Transfer Channel
Frequency
Percentage
Western Union
70
35.00%
Money gram
17
8.50%
SWIFT Transfer
90
45.00%
Rapid Transfer
23
11.50%
Total
200
100.00%
Sources: field survey July, 2012
Table 4.3 shows that most of the respondents (90) were found to be using SWIFT
Transfer which constitute 45% of the entire sample of respondents, and followed by
Western Union (70) which also represents 35%. Third most subscribed channel for
money transfer among the respondents was Rapid Transfer which also constitute 11.5%
whereas Money Gram accounted for 8.5%, hence it been established that, most
customers were aware of the various transfer channels at their disposal and mainly use
the bank‘s channel for money transfer.
68
SWIFT transfer is seen as preferred channel probably because the transfer goes straight
into the recipient account and the customer is saved from rigorous documentation and
identification
processes as is associated with remittances that are received at the
counter. Western Union was the second most patronize channel by respondents and it
could mean that Western Union is popular among both senders and recipients who do
not do account-to-account or cash-to-account transfers. Orozco (2007b) stated that the
governments of Russia and Ukraine do not endorse exclusive agreements, yet despite
the presence of 16 competitors in Russia remitting to Central Asia and the Caucasus
region, Western Union continues to dominate the market. He continued that, although
the cost of sending to that region is more expensive via Western Union than through
other providers, consumers prefer to use Western Union. According to World Bank
(2006), among the most dominant participants in the remittance-sending space are
international money transfers organizations (MTOs) led by Western Union and
MoneyGram. Their status is due to a number of factors including first-mover
advantages, high fixed costs, and challenges in meeting regulatory requirements.
4.4
Years respondents have been receiving remittances
The study found that, all the respondents have been using the various channels for
personal remittances. Figure 4.3 indicates that 12.5% of respondents have received
remittances for a period less than a year. 30% and 25% of respondents have received
remittances between 1-3, and 3-5 years respectively. Figure 4.3 also shows that 19.5%
of respondents have received remittance between 5-7 years whilst 8% of respondents
69
have received remittances for 7- 9 years. 5% of respondents were found to have
received remittances for more than 10 years.
The result shows that out of the 200 respondents interviewed about 175 have received
remittances for more than a year. This could probably mean that the respondents
appreciate remittances services render by the bank and have decided to keep faith with
it despite stiff competition being offered by other institutions.
Figure 4.3: Percentage of years respondent have been receiving remittance
Sources: field survey July, 2012
70
Frequency of Remittance
Frequency of remittances was to elicit responses as to the number of times respondents
receive remittances. The responses are presented in figure 4.4 and it is given in
frequencies and percentages. Out of the 200 respondents interviewed, 80 (40%)
indicated they receive remittances every month. 50 of the respondents (25%) stated that
they receive remittances on quarterly basis. Respondents who receive remittances once
every half of the year were 40 (20%) whilst 30 respondents (15%) indicated that they
receive remittances once every year. High number of respondents receiving remittances
monthly may have relationship with the occupation of the respondents since majority of
the respondents were found to be economically productive people and therefore get paid
every month. Quarterly remittances receive by respondents may also have some
relationships with the students who receive remittances to support their education since
the response correspond with the educational system (reopening and vacation) in
Ghana.
71
Figure 4.4: Frequency of remittances by respondents
Sources: field survey July, 2012
4.5 Factors that influence the choice of the channel by remittance recipient
The objective sought to find out from the respondents about the factors that determine
their preference for a particular transfer channel to another.
From Table 4.4, one could say that all the respondents had motives or reasons for using
a particular channel in receiving remittances through Ecobank Ghana Ltd. Respondents
who receive Western Union Transfers through Ecobank stated that they do so because
the transaction does not require that you open an account with the bank; the recipient
only has to present his identification, unique code and the sender details and the money
is given out. Respondents also indicated that with Western Union remittances, the
72
recipient does not incur any cost as pertained to the other remittances channels. Other
reasons deduced include transaction services being fast and periodic raffle run by
Western Union which give them an opportunity to win something big and also as a way
of showing appreciation to recipient.
Table 4.4: Factors that influence choice of transfer channel
Transfer
Channel
Western
Union
SWIFT
Transfer
Money
Gram
Reasons for using the channel
1. No cost to the recipient
2. Periodic raffle
3. It is fast
4. No account opening is required
1. Money goes straight into account
2. No identification is required
3. No documentation is required
1. No cost to the recipient
2. It is fast
3. No account opening is required
1. Do not need to have account
Rapid
2. It is fast
Transfer
4. No cost to the recipient
Total
Frequenc
y
70
Percentag
e
35.00%
90
45.00%
17
8.50%
23
11.50%
200
100%
Sources: field survey July, 2012
Respondents who use SWIFT Transfer indicated that the channel does not require any
unique identification code and sender details unlike the other services. The transaction
is credited straight into the recipient account at the bank and saves one from the hassle
of providing detail of the sender as well as rigorous scrutiny of identification and
documentation.
73
Reasons stated by respondents who receive remittances through Money Gram and
Rapid Transfer were the same. Respondents indicated that they receive remittances
through these channels because it is not only fast but there is also no extra cost to the
recipient. They also indicated that the channels do not require the recipient to open an
account with the bank before he/she can access the money.
4.6 Satisfaction of transfer services
Regarding to the service of the satisfaction level among the respondents, money transfer
was found to be high, with majority being 61.67% found to be satisfied with the
services they received from the bank; moreover, 35% of the customers were very
satisfied with the entire services. However, none of the respondents were found to be
dissatisfied or very dissatisfied with the service of the bank with regards to the money
transfer system of which the money or remittance is being channel through. This finding
show the level of acceptance of the various money transfer channels among the
respondents. Hence, satisfaction influenced the choice of a channel by remittance
recipients at Ecobank Ghana Limited.
Respondents gave clear indications of services satisfaction; it is however important to
continue to improve upon the services rendered and observe customers satisfaction or
otherwise through other means, because Day et al. as cited in Lerman (2006) indicated
that not all customers will see as prudent to lodge complains. They will either cease
74
dealing with the organization or continue the relationship with other organizations
though they will be suffering.
Figure 4.5: Satisfaction of Service by respondents
Sources: field survey July, 2012
4.7 Respondents’ expectation with transfer services
Table 4.4 shows that customers sample for the study indicate their expectations were
met which recorded a low standard deviation indicating consistency in the meeting of
customer‘s expectations among the respondents thus the customers of the bank.
However, in terms of existence of competition in the market respondents were much
more neutral to the assertion. Nevertheless, they show a strong agreement for the
assertion that, it is easy way to transfer money, convenient in the price and the serves as
75
the fastest way to receive transfer money from friends and family. This shows that,
customers have positive experience in the money transfer system in place in the bank.
Table 4.5: Respondents Experience with Money Transfer
Detail
Mean Std Dev
The service met my expectations
2.145
0.948
The service didn‘t meet my expectations
4.153
1.142
There is no competition in the market
3.045
1.036
It is easy way to transfer money
2.037
1.074
The price is convenient
1.735
0.935
It is the fast way to receive/transfer money
2.230
1.353
Sources: field survey July, 2012
4.8 Challenges that hinder remittances services from the point of view of recipients
Customer satisfaction is essential and it was therefore imperative to find out from the
respondents about some possible challenges that affect smooth operation of inward
remittances offered by Ecobank Ghana Ltd.
Table 4.5 presents challenges faced by respondents when receiving remittances through
Ecobank Ghana Ltd. Seventy five percent (75%) of respondents indicated that bank rate
is lower than when you collect from friends or business associates because they pay the
hard currency which fetches more Cedis on the black market. 54.5% of respondents
stated that documentation and paper work as in filling forms at the bank appears too
76
cumbersome especially for illiterates. Again, 50%, 40%, 35%, 39% and 25%
respectively stated that bureaucratic red tapeism at the bank, long queue, frequents
network problem, poor handling of customer complaints and poor customer service are
some of the challenges or difficulties faced when receiving remittances from bank.
Table 4.5 reveals that respondents ranked lower exchange rate as the most disturbing
challenge followed by cumbersome documentation and paper work. Bureaucratic red
tapeism at the bank was ranked third with long queue at bank being fourth. Sixth on the
rank was poor handling of customer complaints with frequent network problem being
seventh. Last on the rank was poor customer service.
It is important to that conscious efforts are taken to address the challenges raised by
respondents because Sureshchander et al. (2003) posited that the quality of service and
satisfaction are the most important indicators of cementing the relationship between the
organization and its customers. Owusu-Frimpong (1999) also indicated that duration of
service delivery gives both positive and negative impression to customer. Concerns
raised by respondents with respect to lower exchange rate agrees with the finding of
Russell (1986) who specified that exchange rates, and interest rate differences between
the host country and the country of origin are some of the possible factors that tend to
affect remittances.
77
Table 4.6: Challenges faced by respondents in receiving remittances from Ecobank
Challenges
Frequency Percentage (%)
Lower exchange rate
150
75
Cumbersome documentation and paper work
109
54.5
Bureaucratic red tapeism at the bank
100
50
Long queue at bank
80
40
Frequent Network problem
70
35
Poor handling of customer complaints
78
39
Poor customer service
50
25
Sources: field survey July, 2012
Multiple response
Section B: Staff and management perspective to Ecobank Money Transfer
Services
Money Transfer Strategies
Qualitative data from staff of Ecobank indicates the bank receives money on behalf of
benefactor and send the money to the appropriate destination of which the benefactor
can claim the said amount without confrontation and difficulties in a fasters form which
the bank has executed such a task effectively and consistently to meet the expectations
of its cherished clients over the years.
With prompt and efficient technical support team available for 24 hours all days within
the week including the weekends, the system is trusted as s sustainable enlisted strategy
78
of the bank for the execution of such prolific task to its customers. Moreover, the study
finds that, the bank deals with two types of transfer, thus
International transfers which consist of Western Union, Money Gram and SWIFT
Transfer as well as local transfer schemes within the country and all its affiliates such as
Rapid transfer and Internal transfer.
These transfer schemes are all being operated by Ecobank to reached its customers
irrespective of whether benefactor saves with the bank or not.
4.9 Effects of Money Transfer on Ecobank Performance
Staff of the bank gave some descriptions of money transfer effects on the general
performance of the bank which cut across all various forms other than increased in
activities of the bank, some of the listed performance were as follows:

Increased customer base resulting in increased deposits for the bank which helps
it to increase its buying of government securities and hence increases its money
making with the central bank

Increased in profit and revenue due to the inflow of money from both depositors
and benefactors which gives the bank some form of service payment as a result
of the bank‘s involvement in transferring the money.

It has helped the bank to increase its customer service and expansion by
involving more technology solution to its customer edge service delivery.
79
These were found to have been resulted in having impact on the shareholders‘
dividends, since higher performance leads to higher dividends paid to shareholders.
4.10 Challenges in Planning and Execution of Money Transfer Strategies
Various challenges were found to be associated with the day to day operations, planning
and execution of services, these challenges tends to hinder the full operations of the
services needed to render to clients. The most prevailing challenge found was poor
communication between the operations and technical team as to the exact description of
resulted difficulty and technical hitch to the technical team and the breakdown of
internet connectivity as well as software slowness in the execution of services.
Moreover, the cheques are expensive as well as non-briefing of customers to changes in
services as the need arise. These challenges hindered the remittances services for the
point of view of recipients and management at Ecobank.
80
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter discussed a summary of the entire work. The overall aim of the study was
to identify the different channels through which personal remittances are received
through Ecobank; to determine the factors that influence the choice of the channel by
remittance recipients at Ecobank Ghana Limited and finally to find the challenges that
hinder remittance services for the point of view of recipients and management at
Ecobank Ghana.
5.1 Summary of Findings
5.1.1 Different Types of Money Transfer Services Rendered at Ecobank
The study reveals that, Ecobank render two types of money transfers in its operations in
general, thus International transfers system consisting of Western Union, Money gram,
and SWIFT Transfer as well as domestic transfer schemes within the country and all
other affiliates such as Rapid transfer and internal transfer.
These were found to be operational in all of its branches countrywide as was agreed by
the staff of the bank. These various money transfer schemes was found to have been
greatly contributed to the general business of the bank and have relieve clients the task
of offshore money transfer and the burden of security regarding of money transfer both
81
domestically and internationally. It was found that, customers of the bank and other
clients has been using these money transfer for quite a long time with Ecobank due to
its safety and better service delivery offered by the bank.
5.1.2 Factors Influencing the Choice of the Different Channels of Money Transfer
Services by Customers
The study reveals that, customers likeness about the money transfer system with
Ecobank is due to its speed and security, again what motivates them about the choice of
the different channels is due to its easy to use and security as well. This shows that the
most influential factors associated with the various choice of different channels of
money transfer services is characterize by its speed, security and easy to use. This
informs the customers as to which of the transfer systems is convenient for their use,
and much more effective to deliver its services to their satisfaction. Furthermore, the
study reveals that, customers expectations were met by the services these different
schemes offer to them.
5.1.3 Effectiveness and Efficiency of the Money Transfer Operations in the Bank
The study indicate that, the delivery of services with regards to its effectiveness and
efficiency is very high, due to the rapid response the bank attached to competition in the
market, again the bank has a prompt and efficient technical support team available
anytime to check the systems, this ensures an effective and more efficiency in the
delivering of the services Ecobank renders to its clients. It was found that, the bank
82
exercises a better customer service delivery in all of its services to the customers
regardless of the kind of money transfer schemes the clients used for the transfer. These
findings show that, the bank‘s corporate responsibility is not compromised on any of the
services rendered to the general public and its cherished customers.
5.1.4 Effect on Corporate Performance and Customer Satisfaction
The study again reveals that, the money transfer has led to increased customer base
resulting in money cash deposits for the bank which helped to increase its buying of
government securities and hence increases its money making with the central bank,
increased in profit and revenue due to the inflow of money from both depositors and
benefactors which gives the bank some form of service payment as a result of the
bank‘s involvement in transferring the money and it has helped the bank to increase its
customer service and expansion by involving more technology solution to its customer
edge service delivery.
Again on the fore front of the customers it was realized they are very satisfied with the
characteristics of money transfer offered by Ecobank, such as quality of service, speed,
after transfer satisfaction and repeat transfer experience. Besides customers agree that,
the money transfer does what it claims and what the customers need, these shows the
satisfaction level of the customers and hence were oblige to recommend to its friends
and relatives.
83
5.2 Conclusions
Money Transfer is the main channel of sending money both domestically and
internationally to clients, family members and friends as well as to pay for goods and
services executed either within the country or outside the country. The study found out
that, various customers prefer different money transfer channels due to its easy to use
for a particular individual as well as the availability of such services at the destination
where the money is supposed to be received. The study conclude that, Ecobank money
transfer was found to be very efficient and effective for sending money due to its high
caliber of service characteristics such as speed, security and easy to use and has
contributed significantly to the bank‘s performance in both service quality delivery and
profit margin of the bank.
5.3 Recommendations
The following recommendations were based on the analysis and the challenges facing
the transfer scheme:
5.3.1
Creation of Communication platform
It is suggested that, a level platform of communication should be created between
the technical team and the bank‘s staff to address technical problems such as
software and internet issues early enough to help deliver a better services to the
customers.
84
5.3.2
Specific tellers for money transfer
The bank should designate specific tellers in its various branches to deal with all the
schemes of money transfer, so as to save customers time of joining the normal
banking queues which in a way frustrate some customers who are not used to the
services of Ecobank.
5.3.3
Diversification of Products
Ecobank should come out with variety of products and services and make them
available for both senders and receivers. For example, a sender will be interested in
mortgage loans and as a result will open accounts with Ecobank, remit into the
account and at some point qualify to own a house. The bank needs to create new
marketing strategy which will attract more clients including priority customer and
thereby increase the total export import business.
5.3.4
Expanding to other countries
Ecobank should consider going beyond the borders of Africa and offer remittance
services and a range of other financial services to other continents.
5.3.5
Training
Ecobank should make it easier for money transfer organizations to acquire the skills
and training to be able to open accounts for migrants on behalf of the bank. Ecobank
will have to arrange more training program for the FOREX officers to improve their
85
analytical ability, communication skill & professional standard regarding the
customer dealing & different foreign exchange operation.
5.3.6
Promoting formal money transfer channel to counter money
laundering
Ecobank should continue to promote formal transfer methods and act against illegal
methods of transferring money to help curb money laundering in the system.
5.3.7
Focus on customer Service and relationship building with all
stakeholders
For better profit than others, Ecobank should create good relationship with renewed
corporate client who have huge amount of Import & Export & remittance business.
Ecobank should make more relationship with the foreign exchange house & special
strategies will have to be considered in increasing nonresident account, indenting &
shipping line account.
5.3.9
Technological improvement
New updated banking software should be installed for foreign exchange department
and the bank should take proper steps for the implementation of new systems. Good
database should be put in place for keeping proper records and for easy
86
reconciliation. Proper network and other communication channels such as internet
used for the transfer platforms must have perfect uptime.
5.4 Suggestion for further research
This study having been limited to inward remittances of recipients within the financial
sector has not been able to fully exhaust the study on remittances and will suggest to
other researchers to further look at the senders, and the non-financial sector.
87
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APPENDIX 1:
SAMPLE QUESTIONNAIRE
PERSONAL INWARD REMITTANCES THROUGH BANKS IN GHANA; A
CASE STUDY OF ECOBANK GHANA LIMITED
APPENDIX 1: QUESTIONNAIRE FOR THE STUDY RESPONDENTS
(CUSTOMERS)
SECTION A: Bio-Data
Please complete this section by ticking the applicable box
1. Gender:
Male [ ]
Female
[ ]
2. Age:
20 – 30years [ ] 31 – 40years [ ] 41 - 50years [ ] 51 – 60years [ ] Above 60
years [ ]
3. Number of years with the company
Less than 5years
4.
[ ] Between 6 – 10years
[ ] Above 10years [ ]
Which of the following best describe your current job position?
Lower Level Executive [ ]
Middle Level Executive [ ]
5. Please tick the department in which you work below:
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Senior Executive [ ]
Human Resources [ ] Finance [ ] Retail [ ] Corporate [ ] Others: Specify……….
6. Which of the following best describes your level of education?
1) University and above [ ]
4) Secondary Education
[ ]
2) Diploma [ ]
3) Professional Training [ ]
5) Middle School/ Basic Education [ ] 6) Non
[ ]
SECTION B: Money Transfer Operations
1. What channel do you use to receive /transfer your money?
Western union [ ] Money gram [ ] SWIFT Transfer [ ] Rapid Transfer [ ]
2.
How long have you used this money transfer service?
Less than 6 months [ ] More than 6 months but less than 1 year [ ] 1-3 years [ ]
Over 3 years [ ] Never used it [ ]
3.
How often do you transfer/receive money?
Monthly [ ] Quarterly [ ] Half Yearly [ ] Yearly [ ]
4.
Overall, how satisfied are you with the service?
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Very dissatisfied [ ]
Dissatisfied [ ]
Neither satisfied nor dissatisfied [ ]
Satisfied [ ] Very satisfied [ ]
5. How satisfied are you with the following characteristics of money service?
1 – Very satisfied 2 – Satisfied 3 - Neither satisfied nor dissatisfied 4 –Dissatisfied 5 –
Very dissatisfied
Quality
12345
Cost-fees
12345
Speed
12345
After transfer satisfaction
(Customer service, etc.)
Repeat transfer experience
12345
12345
6. How important are the following characteristics when transferring money?
1- Extremely important 2- Very important 3 - Somewhat important 4 – Not very
important 5 – Not important at all Quality
12345
Cost-fees
12345
Speed
12345
Usage experience
12345
After transfer satisfaction (Customer service, etc.)
12345
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Section D: Recommendations
1. Has the performance of Ecobank been enhanced by the introduction of Money
Transfer?
a. Yes [ ]
No
[ ]
Explain the choice of the above.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
__________________
2. Provide the requisite recommendations to improve the current Money Transfer strategy
being pursued by Ecobank
______________________________________________________________________
______________________________________________________________________
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Appendix 2:
Interview Guide to Management and Staff
STRUCTURED INTERVIEW GUIDE TO MANAGEMENT
1. How much can a sender send per transaction?
2. Can money transfer companies have agents? If so are the rules too stringent?
3. How many money transfer companies (MTCs) use your platform to operate to
Ghanaians? Please name them.
4. How long have Ecobank been operating money transfer?
5. How many clients do you have on your database?
6. What is the average amount sent by sender per transaction?
7. How has global financial crisis affected your business?
8. How is illegal money transfer affecting your business? In your view do more
Ghanaians use the illegal sector than the formal?
9. What can Bank of Ghana do to help your business?
10. What can the regulator of your host nation do help your business?
11. In your view how is the unlicensed money transfer agent able to quote an exchange
rate cheaper than official BoG rate?
12. What other factors may be affecting your business?
96