In order to restore confidence in the financial sector, the central bank – together with its agencies – must rate and publish the performances of financial institutions, Joe Jackson, Dalex Finance’s Chief Operations Officer, has said.
Doing this, he said, would not only shine light on businesses that are doing well, but also let people know those that are doing okay – which he described as key to restoring public confidence in a sector that has taken a hit in confidence over the past 12 months.
“I am saying they should declare who is good and who is bad. In other countries, the institutions get rated. So, let the central bank rate us and we can publish our ratings so that customers can reach a good conclusion on their own as to where to put their money,” he told the B&FT in Accra.
“It is not fair for the few bad nuts in the business to cause such fear and panic among everybody. Up till now what has been happening is too much; the rumour and conjecture is not good. We need to know those that are doing ok and those that are not,” he advocated.
Since August last year, the banking sector reforms have seen the revocation of licences from five local banks – UniBank, The Royal Bank, Sovereign Bank, Construction Bank and BEIGE Bank – and approval of a purchase and assumption agreement for GCB to take over Capital and UT Banks
However, Mr. Jackson believes that the regulator’s handling of the crisis is not the best. He said due to lack of information on the status of the various institutions, most people are beginning to steer-clear of financial service providers because of fear.
Mr. Jackson therefore urges the BoG to come out with a performance-rating system for financial institutions.
Going forward, he also recommended that only fit and proper people should be allowed to start a financial institution.
“The central bank has already brought up rules about fit and proper persons, but it should enforce them. We have good laws in the financial sector, but it is compliance that is the problem. That is why some of us also fault the Bank of Ghana for been complicit by allowing some of those institutions to run for so long without complying with the laws. So, the bank must ensure that people comply with the law; and if we are able to do this, things will improve,” he indicated.
Public must not pay for someone’s mismanagement
According to him, the public purse has been raided to provide funds in excess of GH¢8billion to set up Consolidated Bank – and he does not see why the taxpayer should be made to pay for the collapse of those institutions.
“I am of the view that Ghanaians are not angry enough about the situation. Somebody mismanaged the money, leading to the collapse of those institutions – and we are all paying for it.
“We should be angry; we don’t even have enough money to pay for free Senior High School education, we don’t have money to pay contractors; the country is broke and yet this same broke country has had to take billions of cedis to pay for this mess – be it mismanagement or collusion,” he noted.
On what should be done to whoever is culpable, he stated: “As it stands I can’t judge. I would say let the processes happen quickly so that whoever is responsible will be held accountable. The amount is too huge”.