Ghana’s entire banking sector could have collapsed totally had the Bank of Ghana not intervened quickly to revoke the licences of some failed banks, President Nana Akufo-Addo has said.
According to him, there would have been more job losses than the estimated 3,000 plus jobs that got lost in the central bank’s cleanup exercise, had there been a little delay in intervening to save the sector.
“If we haven’t intervened all, 10,000 jobs would have gone out of the window”, the President said in response to a question asked by Accra-based Citi FM’s Sammy Wiafe about whether or not his government could not have handled the situation differently to forestall the job losses that accompanied the central bank’s cleanup exercise.
He added: “The situation which we inherited when we came is that the banking system – unregulated or very poor regulations, the poor governance practices among the banks, lots and lots of irrecoverable debts, generally a very fragile under-capitalised banking system… – if we allowed them to continue for a day longer, we would have brought about the collapse of the financial system in our country in the banking system, and instead of losing 3,000 jobs, we would have lost about 10,000 jobs.”
Justifying the cleanup further, Mr Akufo-Addo said: “We had no option, the manner in which we intervened was absolutely right, we could not have waited any longer and I’m yet to be told of the model of rescue that would have been preferable and more effective than what we did. What we did was essential and right”.
The President expressed satisfaction about the action taken by the Bank of Ghana with support from the Ministry of Finance, saying though there have been some difficulties and dislocations, his government had no choice in the matter. “Yes, they’ve caused some dislocations and some difficulties, but we have no choice, we have no choice; in fact, if we had delayed in acting, we would have been very much condemned by history… It is unfortunate.”
He noted that his government had not made any projections regarding monies to save the banking sector because it did not anticipate the state of the banking system, though Vice-President Dr Mahamudu Bawumia, in the lead-up to the 2016 elections, had predicted the collapse of some banks: “He even went so far to identify that eight banks were threatened…it turned out that nine banks were what was closed… And, so, his reputation as a prophet is well-deserved.”
The President noted that the GHS15 billion bailout funds projected to save the banking sector can take care of 95 per cent of depositors’ funds.
The banking sector led to the collapse of nine local banks.