On Tuesday, July 23, 2024, the Ghana Association of Banks (GAB) and the Association of Oil Marketing Companies (AOMC) held a pivotal dialogue addressing the critical issue of financing growth in the petroleum downstream sector. This collaborative effort aimed to address key challenges and unlock mutual benefits for both oil marketing companies (OMCs) and banks.

Mr. John Awuah, the Chief Executive Officer of GAB, lauded the initiative as a significant step in the right direction. He, however, highlighted several pressing concerns banks have with some AOMC members, notably the substantial impairments accrued from OMCs and the origins of the ESLA bonds. Mr. Awuah reiterated that while lending is the core operation of banks and they are eager to support OMCs, the alarming levels of non-performing loans (NPLs) from some OMCs complicate the seamless disbursement of credit.

He recounted instances where managers of OMCs diverted credit intended for operations into other businesses, such as real estate and farming, which adversely affects the financial ecosystem. Mr. Awuah emphasized the apparent “disconnect” between the owners and managers of some AOMCs, leading to breakdowns in corporate governance.

Dr. Riverson Oppong, the CEO and Industry Coordinator of the AOMC, acknowledged the challenges raised by Mr. Awuah and affirmed the importance of the engagement. He underscored the need to establish a robust working relationship between the two associations. Key issues raised by the AOMC included delays in credit disbursement, rising costs of credit, banks’ KYC requirements, and the fact that only 15% of AOMC members account for over 75% of all industry operations.

Dr. Oppong also highlighted ongoing initiatives by the association to ensure that, in addition to the official licenses members receive from the National Petroleum Authority (NPA), members in good standing will be issued certifications. This measure aims to clean up the system and limit the negative externalities caused by bad actors, which make it difficult for compliant members to secure credit and other opportunities.

He proposed workshops between GAB and OMCs, along with capacity-building programs for OMCs, to address key issues and ensure members are abreast of the requirements from banks.

The meeting concluded with both associations expressing their readiness to collaborate and share information to facilitate the smooth operations of their members.