The Vice President, Dr Mahamudu Bawumia, has assured depositors whose funds have been locked-up in regulated but defunct financial institutions of full restitution of their funds.
Speaking at the Great Hall of the Kwame Nkrumah University of Science and Technology as part of the two-day Government Townhall Meeting and Results Fair in Kumasi, Ashanti region, on Tuesday, 11 February 2020, Dr Bawumia said the Government empathises with depositors, who have endured anguish and hardships through no fault of theirs.
In 2019 the Bank of Ghana, in a series of moves to clean up the weak and messy financial sector, revoked the licences of a number of banks, microfinance and savings and loans companies, leading to an unfortunate loss of jobs and in some cases, the locking up of depositors’ funds.
To assuage their pain, government has pledged to restore 100% of their locked-up funds, once they have been verified. In a further move to address residual pain from previous collapses, Government will secure the funds and pay up the victims of DKM, who lost part of their investments after the Bank of Ghana suspended the operations of the DKM in 2015, Vice President Bawumia added.
The Vice President accused the previous government of playing the Ostrich, burying its head in the sand and papering over the cracks, which were noticeable as far back as 2012.
“We (Akufo-Addo government) inherited a financial system that was weak and fragile with several institutions that had collapsed or were on the verge of collapse. The Bank of Ghana in cleaning up and strengthening the financial sector, revoked the licenses of many banks, savings and loans and microfinance companies. Some have criticised the action of the central bank for a variety of reasons.
“(But) first of all, let us remember that the failures of financial institutions that we have witnessed recently, were a direct result of a system of poor licensing, non-existent capital, weak corporate governance characterized by related party transactions, political influence peddling, cronyism, among other things.
“The NDC government and the previous management of the Bank of Ghana had ample time to address impending failures. They were aware of the problems in 2015 in the case of banks and as far back as 2012 in the case of savings and loans and micro finance companies. Even in opposition, I alerted the country that on the basis of available data, eight banks were likely to collapse but they refused to act,” Dr Bawumia recalled.
“The swift and decisive action taken by the new management team at the Bank of Ghana provided relief for the financial system as a whole through the funds provided by Government for depositor payouts.”
Over a million depositors have had access to their deposits already and over 7,000 jobs have been saved as a result of employees taken on by GCB, CBG, or the receivers, the Vice President noted.
“Employees whose salaries and employee benefits had been unpaid by the defunct institutions have been paid or are being paid by the receivers. Government has already spent over GHS13 billion paying depositors of banks and other financial institutions, and the President has given the assurance and I will like to repeat that no depositor of a bank, savings and loan or microfinance company would lose even a pesewa of their deposits.
“All depositors of these institutions will receive a 100% refund of their deposits since this was no fault of their own. Government has asked the receiver (working with the Bank of Ghana) to expedite the validation and payment of depositors so that all depositors will receive their monies after validation.”
He continued: “I will also like to add that this refund will also extend to customers of DKM who have not as yet received the full refund of their deposits. We are therefore cleaning up the mess the NDC created in the financial sector.”