The two main sources of the statutory rules that regulate the business of banking in Ghana are the Bank of Ghana Act, 1963,2 as amended by the Bank of Ghana (Amendment) Act, 1965,3 and the Banking Act, 1970.4 Other legislation laying down rules relevant to the business of banking are the Companies Code, 1963,5 the Building Societies Ordinance, 1955,8 as amended,7 the Moneylenders Ordinance,8 the Incorporated Private Partnerships Act, 1962,9 and the Bills of Exchange Act, 1961.10

Before July, 1970, the Bank of Ghana was given a certain amount of control over the operations of banking institutions by sections 29–35 of the Bank of Ghana Act, 1963 (Act 182). In exercise of those powers, the Bank of Ghana could, for example, prescribe the amount of liquid assets to be held by banks, request banks to furnish statements of their accounts, and fix the minimum paid-up capital to be maintained by banks.

On May 12th, 1962, the West African Monetary Union was established by treaty between six French-speaking African states, Senegal, Ivory Coast, Upper Volta, Niger and Dahomey. This Union is linked with France by a system of “operations accounts” concluded between the French Treasury and individual issuing banks. The system ensures the free inter-state convertibility of their currencies and with the French franc, the C.F.A.F. (Communauté Financière Africaine Franc) being guaranteed by the French Republic. Under this system commercial and financial transactions are free within this monetary area, and within the Franc Zone. A common central bank, the Central Bank of West African States, was set up.

It is perhaps desirable to start off by reminding ourselves as to what generally is the law which is applicable to bankers in Kenya. We know that the sources of Kenya law as set out in the Judicature Act, 19671 are:

“;(a) the Constitution;

(b) subject thereto, all other written laws, including the Acts of Parliament of the United Kingdom, cited in Part I of the Schedule to this Act, modified in accordance with Part II of that Schedule;

(c) subject thereto and so far as the same do not extend or apply, the substance of the common law, the doctrines of equity and the statutes of general application in force in England on the 12th August, 1897, and the procedure and practice observed in courts of justice in England at that date:…”;

Like most modern institutions in the developing countries, the financial institution of banks and banking is foreign and, to begin with, banking was introduced in the last decade of the 19th century for the benefit of the early European mercantile houses in Nigeria. The first bank to appear on the Nigerian scene was the Bank of British West Africa (later known as the Bank of West Africa but now as the Standard Bank of West Africa) having been established in 1894, and it was the only bank operating in Nigeria until 1917, when the Colonial Bank, which later became part of the Barclays Bank D.C.O. in 1925, was established.1 The first indigenous bank was the National Bank of Nigeria founded in 1933.2

In the paper which I contributed to the symposium, Changing Law in Developing Countries (London, 1962), “Legal development and economic growth in Africa”, I made the following basic points:

(1) Economic growth in the developing African countries depends on capital accumulation and the stimulation of trade, investment and productivity. Hence the paramount importance of the laws in those countries governing investment, commercial enterprise and the grant of credit.

In Kenya there are no restrictions as to where a farmer may borrow money for the development of his farm and almost all institutions which lend money give considerable financial assistance to farmers. Kenya's economy is based largely on agriculture and the government has always supported agricultural industries in every way possible; one of these ways has been to make money available to farmers. To carry out this function, the government set up various institutions for the lending of money for agricultural purposes. Most of those institutions have now been dissolved and a few of those remaining are no longer actively engaged in the lending of money. At the present time, the main government credit institution is the Agricultural Finance Corporation.

An insistent demand from developing countries for capital to finance their economic growth has characterized the second half of this century. The transfer of resources from industrialized countries has, however, encountered difficulties, on the one hand, because of growing economic nationalism which has limited the scope for direct investment and, on the other hand, because of the emergence of excessive debt service burdens in developing countries. As a result, a variety of ways of transferring resources, which would be acceptable to donor countries as well as to the recipients, have had to be explored. One of the means to which the European Economic Community has resorted is the extension of the functions of the European Investment Bank, working in conjunction with the Economic Development Fund, to provide financial assistance outside the territorial limits of the European Community under a series of agreements including successive agreements with the Associated African and Malagasy States.

Development is a process which involves change, change from a state of under-development to better conditions of life. It is in terms of this process that the term “developing nations” is used to describe the countries with a backward economy which they are in the process of developing. If development involves change, the institution-building that goes with it can also be described as institutional change. Development lending is thus, by definition, linked with institutional change. Any development needs institutions that meet its operational requirements, and the creation of such institutions often affects vested interests. Thus development lending and institutional change often involve conflict between reformers and those with vested interests within the borrower country.

This Table summarises the effect of legislation in the different countries covered in regard to: the definition of “bank” and “banking”; how banks are distinguished from other financial institutions; restrictions on use of “bank”, etc.; statutory requirements for formation of a bank; licensing or registering of banks; control over banks’ ratios, reserves, deposits, etc.; and provisions for the protection of customers.