BoG deserves credit for ‘tough’ decisions – Otumfuo

A Senior Official of Unity Oil receiving a Special Gold Award in the Miscellaneous Energy/Tourism/Media Category on behalf of Dr. Kwame Kyei, Chief Executive Officer, Unity Group, from Dr.  Awal

The central bank of Ghana deserves credit for taking ‘tough’ decisions to restore confidence in the banking sector, Asantehene, Otumfuo Osei Tutu II has said.

“The Bank of Ghana (BoG) deserves to be commended for having the courage to take the drastic action it took to dissolve the banks at the time it did, rather than delay further to make a bad situation worse,” the Asantehene said.

The traditional ruler of the Ashanti Kingdom was however quick to add that the BoG must accept part of the blame for the catastrophe, because it failed to detect the rot in good time.

“Crucially,” he said, “there had long been ample evidence pointing to the precarious condition the seven banks were in, but the Bank of Ghana reneged in acting on it.”

“The Bank of Ghana must accept part of the blame for the catastrophe, insofar as the central bank’s weak banking supervision function failed to detect the bad corporate governance in such good time as to take remedial action to prevent a collapse of the banks in the first place,” he noted.

Otumfuo said this in a speech read on his behalf at the 5th Ashanti Business Leaders Excellence Awards ceremony held in Kumasi to commemorate his 20th anniversary on the stool.

In 2017, Capital Bank and UT Bank collapsed and their assets and liabilities were taken over by state-owned GCB Bank.

This was followed by revoking the licenses of five other indigenous banks: Sovereign Bank, Construction Bank, uniBank, The Royal Bank, and BEIGE Bank. Deposits held by those five banks were then transferred to a newly-established entity, the Consolidated Bank Ghana. According to the BoG, the seven banks were not liquid enough to remain in business.

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However, the Asantehene believes that the situation could have been averted had the central bank been proactive in its supervisory function over the banks.

“Ironically, until their collapse, all these banks appeared to be performing pretty well as far as the average Ghanaian was concerned. Their demise therefore came as a rude shock to most Ghanaians, especially deposit holders and other customers of the concerned banks,” Otumfuo added.

He further stated that the lesson the Bank of Ghana ought to learn from this unfortunate crisis is “to be pro-active in its banking supervision duties in order to forestall the recurrence of what might have been an avoidable banking meltdown”.

Lending rates must drop

To address the nagging issue of the high cost of credit, the Asantehene said there is a need for universal banks to emulate the Bank of Ghana’s example in lowering their interest rates.

He cited the Business Barometer Survey by the Association of Ghana Industries, which has access to credit and the cost of credit as the top challenge faced by businesses in the country.

“We are all aware of the difficulty with which the business community accesses loans, especially long-term funds,” he said, adding that “I wish to make a special appeal, once again, to our financial institutions to introduce more innovative and business-supportive products and services to enhance business development”.

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On his part, Dr. Ibrahim Mohammed Awal, Minister for Business Development who was the guest of honour, announced that government is in the process of implementing three business promotion programmes across the country – from which the Ashanti Region will be first to benefit.

He said that under the Training for Young Businessmen module, a trainer from Spain will offer business-oriented training to 400 trainees in the Ashanti Region.

Also, 300 young businessmen and women from Ashanti will receive financial support under the Young Businesses Fund, while 100 beneficiaries from the Ashanti Region will be covered under a Fund to support Physically Challenged businessmen and women.

Unlike others, Dr. Awal explained that the former fund attracted only a 10% interest, whereas the latter will attract no interest at all – with 50% of the facility being free from re-payment.

Meanwhile, according to Isaac Dakwa, Director of Top Brass Ghana, organiser of the awards scheme, previous editions of the awards had been limited in scope to business leaders based in the Ashanti Region; but on this special occasion of Otumfuo’s 20th anniversary, it was expanded to recognise deserving business leaders located outside Ashanti whose products and services have a positive impact on the region’s economic development.

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