Chapter Five

Summary of Findings, Conclusion and Recommendations

5.0 Introduction
This is the final chapter of this study and is a composition of summary of all the major findings,
conclusion drawn on all that have been unveiled from the study, and the relevant recommendations
made that would lead to policy formulation and further research work in the field by future
researchers. The study seeks to critically examine financial intermediation challenges through a
customer satisfaction survey stand point, a case study of EcoBank (S/L). It should be indicated that
conducting this kind of research where there is inadequate availability of primary data on the topic
was a very herculean task. It was discovered that some of the key respondents such as EcoBank
(S/L) management staff, Bank of Sierra Leone (BSL) officials, and selected EcoBank customers,
were very uncooperative in responding to interview questions and filling out the research
questionnaires, partly as a result of their busy schedules, which resulted in some appointments
being canceled. Despite all these inherent challenges, the researcher managed to come up with
critical findings, conclusion, and relevant recommendations to serve as a set of tools that would be
used to formulate policies in order to enhance knowledge on financial intermediation challenges
in Sierra Leone and also inspiring further research in the same field.

5.1 Summary of Major Findings

This section of the chapter reveals critical findings from the entire study which is the direct
aftermath of both empirical and theoretical analysis and interpretations. This study postulates that
there is a correlation between efficient financial intermediation and sustainable customer
satisfaction from the stand point of commercial bank operations. The major findings that emerged
from the study are highlighted below:

5.1.1 Weak Regulatory and Legal System:

Based on the responses obtained from the questionnaires distributed and personal interviews
conducted, it became evident that the banking sector in Sierra Leone is operating in a weak
regulatory and legal system. The current state of banking supervision is rudimentary. One certainly
does not see any attempt to explicitly organize the approach to assessing the soundness and

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management of a financial firm in light of risks and risk management. This would emphasize the
importance of a clear understanding of financial risks and optimal assignment of the responsibility
for managing different types of risks (namely, liquidity, credit, interest rate, market, foreign
exchange, operational, sovereign, legal, and fraud risk). These coupled with other micro economic
factors constitute major financial intermediation challenges faced by commercial bank institutions.
The following are the key findings relating to the regulatory and legal environment of Sierra
Leone:

 Weak judiciaries which call into question the ability of the judicial system to enforce
creditors’ rights in the event of default.
 Lack of independent operations of the Central Bank. The Bank of Sierra Leone leadership
is politically determined and the institution itself lacks effective autonomy. The unfortunate
result is that its ability to supervise the financial system coherently is most times
compromised.
 Compounding the above, over-regulation can emerge, for instance, preventing foreign
players in local markets (Conning and Kevane, 2002). Further, most financial regulations
were scoped for large players with sizeable deposits, and prudential requirements that focus
on protection of depositors restrict banks’ ability to cater for the poorer segment of the
population.
 Often, legislation is complex and difficult to administer. Interest rate caps are prevalent
and these are distortionary. Contrary to popular expectations, research suggests that the
poor are willing to pay market rates for productive uses of borrowed funds (Nelson, 1999).
 Problematic legislation leads to fragmentation whereby no operational or strategic linkage
among formal, semi-formal and informal micro-finance institutions exists. This leads to a
failure to tap into synergies – where some are good at collecting deposits but lack local
knowledge and information and vice versa.

5.1.2 Inherent Institutional Problems:

It was discovered from the study that the commercial bank institutions themselves are faced with
inherent challenges in their operations. Most commercial bank institutions including EcoBank do
not have the risk analysis expertise or the familiarity with rural, poor potential clients. Moreover,
lending system is highly collateralised rendering it inappropriate for the poor. While informal

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organisations and NGOs are more familiar with these markets, they lack the resources of the formal
lending institutions to adequately serve the poor. A lack of familiarity with potential clientele often
leads to inappropriate instruments when the formal institutions dare to delve in low-end markets.
Research suggests that such players sometimes cannot distinguish between liquidity and credit
needs among the poor. Micro-credit institutions have a tendency to be supply-driven and do not
match specific needs (Rosengard, 2001). Because the small, low-end market lacks depth and
liquidity, formal players find it difficult to exploit economies of scale in service delivery. The
added problem of lack of physical and technical infrastructure exacerbates the problem of delivery.

5.1.3 Large Bureaucracy:

Bureaucracy slows down the degree of changes of the organisation, and therefore it is too
cumbersome to control. The findings of the study unveiled that EcoBanks including other
commercial bank institutions observe a lot of bureaucracies in their operations. Documents need
to pass through series of points which most times are not necessary and as such retard vital
operations. Sometimes there is sudden blockage on the passage of document and therefore will
slow down transaction processes. Many signatories to a cheque may be good but it is a waste of
time and disruption of essential banking functions.

5.1.4 Poor Information Technology and Ineffective Internal Controls

Internal controls are processes put in place to prevent wrong doing. These monitor and reduce risk
occurrence in organization’s financial and operational activities. It is discovered from the research
that EcoBank and other commercial banks lack advanced information technology infrastructure
and effective internal control system. It was obvious in the customer survey that most times
customers go to the banks and spend almost a whole day just to make deposits or withdrawal by
cheque or ATM card; it is really an alarming situation especially in EcoBank, mostly due to poor
internet connectivity and weak internal control system. This is a major cause of customer
dissatisfaction.

5.1.5 Poor Corporate Governance:

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The output or derivative of poor governance in any organization is imminent liquidation. Indigent
management methods are a serious menace to the growth of financial institutions, especially banks.
It should be understood that financial resources cannot manage themselves except well-
coordinated following the structures and mechanisms put in place by a diligent human resources
manager/director. It was found out in the study that EcoBank and other commercial banks practice
poor corporate governance which consequently causes huge financial intermediation challenge and
apparent customer dissatisfaction.

5.1.6 Endemic Corruption:

This is a sickness that is seriously affecting many organisations and very alarming the banking
institutions. A corrupt system does not respect merits and as such many management positions in
the commercial bank institutions are observed to be handling by people who got into the
institutions via the back doors. In this case their managerial delinquencies have the potential to
cause limitation in the smooth operations of the financial institution and hence a serious financial
intermediation challenges and customer dissatisfaction.

5.2 The Study Limitations

It is almost impossible to undertake research of this nature without being faced with some amount
of limitations. This study is of course no exception. The researchers encountered certain limitations
in the course of undertaking this study. Key among these includes:

 Scarcity of data: - collecting primary data was not an easy task. Fieldwork was conducted
during festive season, that is, November/December. Sometimes the heavy vehicular traffic
within town would prevent me from arriving at my destination in time to catch up with
interview appointments. In effect, most of the appointments had to be rescheduled
sometimes more than twice. However, to curb this shortcoming, published reports reading
and internet searching on the topic area were used to complement fieldwork.
 Resistance of respondents: the researcher was also restricted by the reluctance of some
respondents, especially EcoBank management executives. Most of them since they work
for the bank they may not want anybody to know their identity and thought that the answers
they provide might be used against them. As a result, we had serious difficulties talking
with them to help with much relevant information, despite my politeness in explaining to

4
 them that the research was for academic purpose. I overcame this problem by not
mentioning their names or trying to know their identities. In addition to this, most of the
EcoBank’s customers interviewed were unable to provide me an articulate information
with regard their perceptions of the bank’s service delivery. This thus limited the
magnitude of raw data utilized in the study.
 Time and funds: another serious limitation of the study relates to time and lack of financial
resources. Thus the research was exclusively concentrated on EcoBank’s head office and
customers within Freetown. I acknowledge the narrow viewpoint of the study and
recognize that sample size may not be exact representative of the study population. There
is possibility of some errors to a limited extent. However, to overcome the limitations and
maintain the effectiveness of the research work sincere efforts were made. This work could
be developed further in the light of future research work in the same fields.

5.3 Conclusion
The study investigates financial intermediation challenges with respect to the banking industry in
Sierra Leone. The research work covers a survey of EcoBank (S/L) executives and customers in
Freetown by the use of focused group discussions and questionnaires administered to find out
opinions of EcoBank management staff and customers on financial intermediation challenges and
commercial banks’ customer satisfaction. The study unveils that the extent to which commercial
banks perform their financial intermediation functions has an important effect on customer
satisfaction. The availability of credit facility with affordable loan condition is particularly crucial,
as majority of commercial banks customers normally seek for loan and overdraft facilities.
Financial intermediation challenges in the context of commercial banks, especially for the poorer
segment of the Sierra Leone population range from macroeconomic and political to micro factors,
such as regulation and institutional arrangements. The poor have diverse credit and saving needs
and are willing to pay market interest rates, but the regulatory environment is typically not
conducive to inter-sectorial linkages to allow the banking institutions to respond more flexibly to
the needs of the poor.

What is clear is that financial intermediation for the poor requires dedication, innovation, and
ongoing research to identify the services that best respond to the needs of the poor while benefiting
the institutions that serve them. Formal, semi-formal and informal sectors all have a role to play.

5
An enabling and flexible regulatory environment will foster stronger linkages amongst the sectors.
Incentive structures and new technologies are also important in the design of sustainable and
efficient financial intermediation to meet the needs of the poorer customer population. Commercial
banks primary function is moving funds from surplus economic units to deficit economic units
(financial intermediation) in order to produce goods and services and to make investment in new
equipment and facilities so as to facilitate the growth of the economy and improve the standard of
living of its citizens. It is generally recognized that commercial banks play a catalytic role in the
process of economic development.

The study was basically aimed at examining the correlations between financial intermediation and
customer satisfaction in the context of commercial bank operations. “Customers are at the center
for all banking activities due to increased competition for greater market share. Focusing on
customer satisfaction has been the key to increasing service quality according to customers’
expectations in the banking sector.” This suggested that the level of service quality is an indication
of the organization's ability to meet customers' desires and demands. Therefore, organizations must
become better in their services to meet the customers' needs and requirements. Managers depend
on customers’ anticipation of service quality for the competition in the market. When customers
are satisfied, they remain loyal to the bank and stayed there for long. For bank to effectively
compete in the environment in which they operate, banks should analyse their market in order to
gain a real understanding of what their customer needs. Banks need to diagnose the customer needs
and wants and design method to satisfy them. Furthermore banks must analyse the strength and
weaknesses of their competitors, they must exploit the weaknesses and try to second guess the
competitors strategies.

5.4 Recommendations
From this study it has become apparently clear that the banking sector in Sierra Leone is confronted
with immense financial intermediation challenges, mostly attributable to weak regulatory and legal
environment, absent of advanced modern information technology infrastructure, weak internal control
system and poor human resource capacity etc. These challenges have huge impact on the operations of
commercial banks in particular and the financial system in general. The following recommendations
are propounded to commercial banks and the entire financial institutions to overcome their challenges
and ultimately achieve their customer satisfaction objectives.

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5.4.1 Improvement in Information Technology Infrastructure
We are now in a new era of technological revolution. Countries are beginning to compete and fight
over control of information rather than natural resources. The vogue today is E-platform which
implies offering financial services through electronic media to various customers irrespective of
place, time, and distance. A customer friendly environment with high quality service delivers
needs to be created in order to enhance satisfaction and high patronage. To this end, improvement
in banking technology and institutional arrangements for transmission mechanism as well as other
operational areas of commercial banks operations to ensure operational efficiency and improved
customer satisfaction has become a compelling necessity. This encompasses electronic money,
internet banking, telephone/mobile banking, reduction of cash transaction, smart card. ATM
transactions, and capacity to process high volume of transactions among others.

5.4.1 Government Should Strengthen the Regulatory and Legal

Environment
In terms of the regulatory and legal environment the following recommendations are pertinent:
 The judiciary must be given sufficient teeth to ensure the credibility of the property rights
regime that creditors can trust. Political interference must be discouraged. It would be
imperative to carry out a formal review of the legal system in light of the experience of the
top international financial centers to ensure that the legal framework is adequate. Even a
casual observation reveals that the regular courts in Sierra Leone are way below the normal
level of efficiency of operations required to support the financial system instead of
representing an obstacle to the system’s development. The evidence on this score must be
clear, since the courts have been handling cases in which the financial-services sector has
been involved. If the hard evidence indicates that the court system is not up to the task,
especially in terms of speed and decisiveness, then thought must be given to creating a
special court system for the financial sector.
 Bank of Sierra Leone (BSL) autonomy must be constitutionally guaranteed and top
leadership must be selected on the basis of a meritocracy.
 Financial legislations and regulations must be revisited to cater for hybrid institutions (for
instance, community banks and micro-finance institutions) that are needed to be more
responsive to the needs of the poor. This is particularly pertinent as it relates to macro
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 prudential requirements such as capital adequacy, as well as to the ability to accept
deposits. Usury laws must be equally revamped in light of research findings that the poor
are willing to pay fair market value for their borrowed funds. New legislation must be
simplified and mindful of business imperatives.

5.4.2 Human Resource Development

The centrality of the human resource in enterprise management is a generally accepted dictum. It
is in this light that management needs to make adequate investment in human factor. The technical
capability, innovative ability and integrity of the human beings operating in the system and
overseeing its markets and organizations are important dimensions of this quality. Indeed, many
of the policies being implemented to boost the development of the financial system should be
designed with the attraction of high-quality personnel in mind. The indispensability of high-quality
people for creating a high degree of competitiveness has forced all financial institutions seeking
to compete on the international stage to be open in their recruitment policies, acquiring people
from wherever they can be found. Sierra Leone would no doubt benefit from adopting such an
attitude.

It should be noted that there is no competitive weapon more potent and effective in a financial
market than the quality of its human resources. As remarked by Sanusi (1995) machines and
advanced technology can provide informational and transactional convenience but only manpower
can provide the credibility, creativity and care that can build long-term customer and client
relationships. In other words, there is need for capacity building in the commercial banking system
to enable it copes with the wind of technological development. Besides, no matter how accurate
or competent a computer is, it cannot feed itself with input and it can neither offer a welcoming
smile nor a warm handshake (Ochejele, 2000). Banking (and indeed the entire sectors in the
financial markets) is people-related and the quality of personnel will make the vital distinction
between what constitutes a good bank and a bad one. Consequently, of all the challenges facing
the Sierra Leone banking sector, human capital development is the most daunting.

5.4.3 Improvement in Infrastructure and Public Services:

The physical and technological infrastructure is important elements of the capacity to perform
financial services tasks, including the ability to innovate. These infrastructures include:
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  Transport and communications networks,
 Basic utilities such as electricity, water, sanitation and the postal system,
 Financial-system-related infrastructure (e.g. trading facilities, clearing and settlement
systems for money and securities, other electronic linkages among participants).

Some of the decisions and investments regarding infrastructure are, of course, left with the
financial services markets and firms themselves. In regard to public sector organization, the central
and local governments should formulate policies regarding the provision of infrastructure and
other public services. It would seem that the effectiveness and efficiency of the public sector could
be enhanced if explicit coordination is arranged within the public sector to focus on the
requirements of the financial system. In the case of Sierra Leone, this could be one of the tasks of
the Financial Sector Steering Committee that has been proposed to oversee the implementation of
the FSDP.

5.4.4 Recommendation for Future Research Works

Considering the limitations highlighted above, it is very obvious that this study is by no means
exhaustive. There are obviously rooms for conducting future research works in the same field for
more extensive coverage of the sample size and generalization of the study findings. The research
was exclusively conducted in Freetown with fundamental focus on EcoBank as it was used as the
research case study. Other commercial banks including their wide branch network in the provinces
and across Freetown were not covered as a result of fund and time constraint. Adequate knowledge
and data could be generated if this research can be extensively undertaken inclusive of large sample
size beyond Freetown. Furthermore, it is obvious that various financial sector reform policies have
been formulated by the previous government to strengthen and enhance the overall performance
of the financial sector. Reform such as licenses and capital adequacy requirement by commercial
banks may need empirical investigation by other researchers in the future.

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