Banking & Financial Sector Clean-Up Exercise was Needless ; Turnaround Solutions should have been adopted to save the Industry: Razak Kojo Opoku Writes

The Banking/Finacial sector clean-up exercise was ill-intended. The exercise created a huge needless costs to Ghana, and undermined electoral fortunes of the NPP in 2020 and 2024. Those affected by the exercise still struggling to forgive the NPP and the government then.

Using GH¢25 billion to settle depositors and revoke the licenses of insolvent banks and micro-finance institutions instead of using the GH¢25 billion or less as a bailout for the banking/financial industry was a useless exercise by the Managers of Ghana’s Monetary Policy and Fiscal Policy between 2017-2020.

Turnaround solutions should have been adopted to save the situation instead of Revocation of licenses, and some of the turnaround solutions are follows:
1. a bailout of less than GH¢10 billon, and amendment to the structure of the Board Corporate Governance with government of Ghana nominating a Chairperson & two other non-Executive Directors to sit on the Boards of the struggling Banks/Financial Institutions for a period of 4 years with the mandate of overseeing compliance and improve Capital Adequacy Ratios (CAR).

2. the government creating an enabling environment for Contractors to be paid on time so that they could have repay their loans to the Banks/Financial institutions.

3. instead of GH¢400 million, the Bank of Ghana should have lowered the Minimum Paid-up Capital Requirement to GH¢250-300 million for Universal Banks, and a maintenance of at least 5-7% of Capital Adequacy Ratio (CAR) against their risk-weighted assets.

It is very likely that almost all the foreign-owned universal banks operating in Ghana received support from the headquarters of their respective parent companies before meeting the GH¢400 minimum capital requirement.

4. instead of GH¢50 million, the Bank of Ghana should have lowered the minimum paid-up capital requirement to GH¢35 million and GH¢70 million respectively for existing Microfinance Institutions & Rural Banks, and the new entrants in this category of Microfinance & Rural Banks.

5. instead of GH¢15 million, the Bank of Ghana should have lowered the minimum paid-up capital requirement to GH¢10 million for the Savings & Loans, and Finance Houses.

6. instead of REVOKING the licenses of the 9 Universal Banks, a one year opportunity & grace period should have given to these banks based on their strength/capacity and preferences to DOWNGRADE to the rank of Microfinance or Rural Bank or Savings & Loans, and Finance House.

7. the government of Ghana through Public-Private Partnership should have acquired 60-70% of the 9 struggling universal banks instead of collapsing them.

8. the government should have also attract and permitt foreign or local investors to take over the ownership of the 9 banks and transform them into a profit-making entities. A standard practice of private-private partnership under the supervision of Bank of Ghana could have save the 9 banks instead of collapsing them.

The aforementioned turnaround solutions could have likely protected the jobs of thousands of people who lost their jobs, and more jobs would have been created as well to increase the productivity in the national economy.

The NPP lost majority of Parliamentary seats in the 2020 elections, reducing from 169 to 137 seats, and also reducing significantly declining in presidential votes largely attributed to the radical financial sector clean-up exercise carried out by the Bank of Ghana. Governor Ernest Addison nearly sent the NPP to opposition in 2020 with that poor-publicy policy implementation.

Moving forward, appointees of future government of NPP should be strictly guided by the following provisions in the Constitution of the New Patriotic Party (NPP), somthing that, Governor Ernest Addison and Ken Ofori-Atta failed to read and contexualized:

Article 2 (13) which states that, “to manage the economy of the country with efficiency and prudence, guided by the consideration of the national interest.”

Article 2 (14) which states that, “to promote a vibrant, free-market economy and encourage vigorous participation by citizens in economic activities.”

Article 2 (15) which states that, “to recognize and guarantee the ownership of property by individuals, either alone or in association with others.”

Article 2 (16) which states that, “to create a climate in which private enterprises will thrive and citizens and foreigners alike may invest without fear and without unnecessary bureaucratic restrictions and impediments, in order to create wealth and prosperity for the citizens and people of this country.”

Article 2 (18) which states that, “to solve the grave problem of massive unemployment and to provide for all who are capable, the opportunity and means of earning a living, either by way of self-employment or as employees in various undertakings.”

Sadly, some members of the New Patriotic Party (NPP) talk or write anyhow on national issues without the full knowledge, understanding, and appreciation of the Aims and Objectives of the New Patriotic Party (NPP).

I sincerely believe that the future government of NPP will NOT appoint a Finance Minister and Governor of Bank of Ghana who would repeat the reckless fiscal and monetary policies of Ken Ofori-Atta and Governor Ernest Addison.