A financial analyst and economist, Dr Michael Dawson has commented on the recent remarks by a professor at the University of Ghana Ransford Gyampo, indicating that the banking sector reforms was executed due to hatred and envy.
Dr Dawson said that available facts do not support the assertion of Prof Gyampo.
“ I am surprised a Professor in Ghana’s Premier University will make this comments. The documents are available for all to read and understand what led to the banking sector reforms.
“I can tell you that, most of the local banks breached several banking regulations. They had governance issues. You had a situation where loans were given to family and friends without proper documentations. Depositors funds were diverted to build businesses of shareholders. Some depositors were not getting back their funds from some of the financial institutions,” he told journalists in Accra on Tuesday November 14.
He indicated that the banking sector reforms undertaken by the Bank of Ghana strengthened the local banks and made them more resilient to shocks.
“I can tell you that no political reasons, hatred and envy were considered during the reforms. In fact the financial system at the time, was on the brink of total collapse.
“Poor business practices and weak capital positions of the banks and financial institutions were visibly seen. The liabilities of some of the local banks were more than their assets.
“You also had a situation where some of the local banks were just surviving on liquidity support from the Bank of Ghana and putting depositors’ funds at risk. The Bank rather intervened to ensure that customers do not lose their money.”
He further stated that the current robustness of the banking sector is due to the financial sector reforms.
“The central bank indicated that the reason why most banks were able to withstand increased withdrawals and met depositors’ demand for cash in the lockdown period, was due to the fact that banks were solvent and well capitalised. I will say that the resilience shown by the banking sector after the reforms was due to the comprehensive financial sector reforms that took place before the Coronavirus pandemic. You can imagine what would have happened if the banking sector reforms wasn’t done. We would have woken up one day to see a collapse of the Ghanaian economy. The measures taken safeguarded the investments of 4.6 million depositors and businesses. The exercise was crucial for stability and confidence in the financial sector.”
During the NDC era, the IMF published several reports warning the Bank of Ghana to take some corrective measures within the banking sector, but the NDC government failed to clean up the sector.
“Is Prof Gyampo aware that the court has jailed Ato Essien in the collapse of capital bank? Michael Nyinaku, Dr Duffuor and others are also in court.
“I don’t know whether he followed the court proceedings on the capital Bank case. I will encourage Prof Gyampo to just go on the BoG website and read the reasons for the reforms. I think we should commend the Governor Addison-led Management for being bold and courageous to undertake the banking sector reforms.”