A Former Chief Justice Sophia Akuffo has said that the managers of the economy should have considered all the possible consequences of collapsing banks and other financial institutions during the financial sector cleanup exercise prior to acting.
In her view, several warnings should have been given to stakeholders by the government and the Bank of Ghana before the exercise took off in order to avoid surprising people.
Asked for her views on the cleanup exercise in the financial sector while speaking in an exclusive interview with TV3’s Alfred Ocansey, Madam Sophia Akuffo said “If you are a humane manager, a quality manager or efficient manager, and you are taking steps you just don’t get up and take the step. Before you take the step you look at the likely consequences, you look at those who are likely going to be affected by those likely circumstances. Then you also have to decide whether they ought to be entitled to something or not. Then when you implement what you implement you are honest, you come out outright and tell them something, people should not wake up one morning and you have changed their horizons. Imagine waking up one morning and there is snow on the ground and MET didn’t tell you, they rather told you it would be a dry sunny day. Basically, that is what happened to these people’s lives.”
Regarding the plan by the government to compensate the victims of the clean-up exercise, she said “You have been silent for these couple of years and now you are going to release their money to them. Really? Maybe somebody had 100 Cedis locked up, at that time that 100 cedis was worth a lot, you are just going to return that 100 cedis to them? Didn’t somebody somehow do business with that 100 Cedis that is why it is even there?”
Last month, President Nana Addo Dankwa Akufo-Addo directed the Finance Ministry to release an amount of GHC1.5 billion to cushion victims of the banking sector clean-up exercise.
The sector minister, Dr Mohammed Amin Adam, said that the government of President Akufo-Addo puts the welfare of Ghanaians first, indicating that people are accountable for their investment decisions and not the government.
“Mistakes were made and people were not well-informed, and they didn’t know who to consult to be advised, but we also know that the people who are affected are suffering, and we have heard that some people have died and others had to commit suicide.”
“This government is so caring that in the first place, we granted some bailout to all the affected and I want to tell you again that the President has directed that we do another bailout.
Additionally, Dr Amin Adam revealed that the government has concluded the crucial debt restructuring programme with its official creditors.
The Karaga lawmaker emphasised that the government has successfully restructured its $5.1 billion debt with these creditors and completed the restructuring of $13.1 billion with Eurobond holders.
The banking sector clean-up in Ghana refers to a series of initiatives by the Bank of Ghana (BoG) to stem an impending banking crisis between 2017 and 2020.
The sector cleanup led to the collapse of 9 indigenous banks and over 300 other finance firms. Some of the collapsed banks were consolidated and/or absorbed by other stronger banks.
In 2017, Capital Bank and UT Bank were the initial casualties and sold to GCB Bank in a Purchase and Assumption transaction.
Other financial institutions like Biege Bank, The Royal Bank, Unibank, Sovereign Bank, Construction Bank Ltd, Premium Banak, and Heritage Bank were merged to form Consolidated Bank Ghana (CBG).
Other financial institutions like Biege Bank, The Royal Bank, Unibank, Sovereign Bank, Construction Bank Ltd, Premium Banak, and Heritage Bank were merged to form Consolidated Bank Ghana (CBG).
Another element of the banking sector cleanup was the increase in the minimum capital requirement. The BoG increased minimum cap from GHC102 million to GHC400 million.
The result was that some of the banks could not meet the new requirement, and as the deadline loomed, half a dozen of the banks merged to form new ventures.
Source: 3news.com
