Liberia recorded its first COVID19 case on March 16 and our government was quick to react. Within a day, strong mandates came from the President to close down all beaches, schools, salons, barbershops, movie theatres (well, we only have one, lol). Social distancing measures were announced including a limit of not more than 5 persons in a bank, at a time, and not more than 10 in a grocery store. Places of worship have also been shut down - congregating in large numbers effectively proscribed.
As someone who runs a not-for-profit organization with schools, and whose work is mostly cash-based because we work in rural communities where there are no banks, I was initially worried about how these measures would impact our operations.
What has this meant for banks? What has this meant for ordinary Liberians who have been encouraged over the past few months to deposit their cash in the banks rather than keep it at home?
At a minimum, most banks have an occupancy capacity of at least 100 persons in their banking hall at any given time. Most halls comprise at least 4 tellers. I spoke to a banker about the impacts on the banks. He agreed to speak to me only on condition of anonymity.
He revealed that on average, each teller is able to process up to 300 persons per day during their peak period which is around the end of the month. With the reduced capacity, tellers are now capping at a minimum of 100 due to only 5 customers in the hall at a time (remember the hall has a capacity of up to 100-minimum).
This has now resulted in longer banking hours as there is usually a long queue of customers who wait their turn to be served. This has also affected the ability of the banks to generate revenue.
Less transactions mean less revenue - that's only one part. Banks rely heavily on interests on loans to also generate revenue. With the closure of many of the entertainment businesses, these businesses cannot make their loan payments. Many businesses are also facing challenges in getting their goods ordered from China as shipping lines have slowed deliveries as well.
This means businesses, which were already struggling to make loan payments, cannot pay right now. The less money banks are able to make or recover from their creditors the less they are able to meet depositors" demand at this time and the various regulatory requirements of the Central Bank of Liberia.
Banks will have a hard time recovering on loans and are likely not to be giving them any time soon, stifling a flow of money supply in the economy, at least in the near run. You cannot lend out what you do not have. Most banks have had to also suspend loan repayments.
Now, back to deposits. The government has been pushing and encouraging people to deposit their money in the banks and not to keep it at home. Many communities that are without banking services or have need for micro-financing outside the various collateral restrictions of established financial institutions have resorted to the establishments of "susu clubs". The susu ma or pa (chairperson) tend to keep the money generated in steel boxes for ease of access for its members rather than deposit same in the banks.
With the limited number of people accessing the banks now, there will be even more reluctance in depositors taking money to the banks.
For now we need to ensure two things:
1. Increase and push for more people to switch to mobile banking services such as SMS Banking, Online Banking, Banking Apps, ATMs and Internet Banking.
2. Integrate the GSM Operators' platforms to provide for the easy transfer of money from one mobile money account to the other across the networks.
Interestingly, thanks to the absence of banks across many rural communities, more people in the rural parts have signed up to and use mobile money than urban dwellers. There are even people who are paying their susu commitments through mobile money options.
Therefore, regulatory bodies and banks need to push more and more people to register for and use mobile money. This must apply to both businesses and citizens. Consistent with the public health protocols, it has less physical interactions, is safer, and cheaper. The use of
ATMs poses a higher risk of transmission since standing 6 feet apart is no longer enough - even in a banking hall.
Like many things about life as we have come to know it, COVID-19 may end up changing the way we will do banking forever.