It is going to be a daunting task for former President John Dramani Mahama to restore the licenses of banks that in his view were unjustifiably collapsed during the clean-up exercise undertaken by the Bank of Ghana (BoG), Financial Analyst Mr Joe Jackson has said.
“It is going to be a tough one,” Mr Jackson said on the Business Focus on TV3 Monday, May 15.
However, he welcomed the promise by Mr Mahama to encourage more local participation in Ghana’s financial sector.
Mr Jackson said Ghana really needs more of the indigenous people to have active participation in the sector.
“There is something else that should excite a little about what he said. Some of us have in time past worried about the concentration of foreign ownership in our financial sector.
“Unfortunately, the closure of [some of the local banks] meant that the concentration of foreign ownership became higher because our local institutions have had issues with governance.
“[John Mahama] says they will be encouraged, that is a good one and I pray it happens because we definitely do need Ghanaians in the financial institutions, we definitely need financial institutions that are sympathetic to the Ghanaian course but which will hold themselves to the highest standards of behaviour especially in governance,” he said while reacting to a promise by the newly-elected flagbearer of the National Democratic Congress to restore the license of the banks that unjustifiably collapsed.
Delivering his formal acceptance speech at the University of Development Studies (UDS) on Monday, May 15 after his victory as flagbearer of the National Democratic Congress (NDC) on Saturday, May 13 he said “we shall promote robust, local participation in our banking and financial, telecommunication, tourism, mining and agric and manufacturing sectors to grow our economy and create sustainable employment for our youths.
“We will restore indigenous Ghanaian investments in the finance and banking sector and we will create a tier banking system that will serve various segments of the market.
“We will give the opportunity to experience banking hands who were laid off needlessly to secure their careers once more and move away from the menial jobs that they were compelled to take.
“As far as practicable the banking licenses that were unjustly canceled by this government will be restored.”
Some local banks collapsed when the central bank revised the minimum paid-up capital for existing banks and new entrants from GHS120 million to GHS400 million.
According to the regulator, this was to test the viability of the banks.
The banks that were unable to meet this new requirement were either merged or collapsed.
Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies closed down during the exercise.
UniBank, The Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, UT Bank, Capital Bank all collapsed. Some analysts and observers criticized the BoG and the Finance Ministry over the collapse of the banks because in their views, these banks could have been saved to continue employing Ghanaians.