Never again should this happen…as President rues funds used for cleanup

President Nana Akufo-Addo has rued the seeming waste of the country’s resources on settling depositors of failed financial institutions, cautioning that people must be vigilant when offered unrealistic rates on their investments, as the economy will no longer be in a position to support such bail outs, should it happen again in future.

Tentative analysis indicate that government will have to spend, at least, GH¢20 billion – equivalent to about 5 percent of GDP – to settle depositors of the seven commercial banks, 386 microfinance companies, 23 savings and loans, and 53 fund managers after their licences were revoked.

Announcing in parliament during his State of the Nation Address that depositors of collapsed microfinance and savings and loans companies will be paid beginning this week, the President lamented the opportunity cost of the GH¢13 billion spent on paying depositors of the collapsed banks, saying, it could have partly been used to address the infrastructural deficits of the country.

“This is money that we can ill-afford, and which would have gone to fund the many things that our communities are crying for. Properly utilised, GH¢13 billion Ghana cedis would work wonders with our perennial infrastructure deficit. But we did think long and hard about paying all the customers of the failed banks, and we believe we made the right decision.

We hope that lessons have been learnt, and this will serve as a healthy caution to those who are offered unrealistic interest rates on deposits. I do not think it will be possible to repeat this grand pay-up in another lifetime,” he said.

The President, however, added that owners and other officials found complicit in the collapse of these firms will not walk away free, but will be made to face the music.

“I want to assure Ghanaians that we are going to hold those who have been responsible for these failures of financial institutions (the supervisors and management of these institutions) accountable, a process which has already started. We expect that those whose job it is to supervise the banks and other financial institutions will do their jobs honestly and competently, he said.

Fund management depositors cry

In November 2019, the regulator for fund management companies, Securities and Exchange Commission (SEC), revoked the licences of 53 companies following their failure to comply with the industry’s requirement and, in some cases, absconding with depositors’ funds.

Affected depositors were promised they would be paid their locked-up investments following the completion of a validation process in the same month. However, almost three months down the line and these depositors have not heard anything concrete as to when they would start receiving their monies like it is happening in the microfinance and savings and loans sectors.

They are calling on government to attach same urgency it has done with the other sectors and make funds available to sort them out as some have their lifetime investments locked up with these fund managers.

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