President Akufo-Addo paid a working visit to the central bank on Tuesday where Governor Dr Ernest Addision noted that financial sector clean-up has resulted in a stable financial sector with fewer banks and Specialized Deposit-Taking Institutions (SDIs) that are well capitalised, liquid, and solvent, and better able to support the nation’s economic growth agenda.
Dr. Addison further stated that the effort helped to earn the Bank international acclaim as the Central Bank of the Year in 2019.
By the end of 2019, all the financial sector soundness indicators showed strong improvements as capital adequacy ratio, profitability, and liquidity levels increased significantly while non-performing loans declined, he added.
However, the Governor was candid enough to admit that government’s decision to provide funding to pay off depositors and former employees of the defunct financial institutions, came at great cost to the national budget.
Dr. Addison told the President that all customers of the nine collapsed banks have been paid their locked-up funds but was quick to state that there were some outstanding payments to be made to customers of collapsed microfinance companies, savings and loans, and finance houses.
Therefore, those clamouring and complaining that they have still not received their monies yet might be in the above-mentioned category who are yet to be served, so we indulge them to keep faith with the receiver and constantly engage him.
In the case of Savings and Loans and Microfinance Institutions, Dr. Addison was clear to the President that more than 95 percent of depositors have been, so there is just about 5 percent of depositors who have not been paid.
Chief Executive Officer (CEO) of the Ghana Investment Promotion Centre (GIPC), Yofi Grant also commented on the financial sector clean up from the perspective of the investing public and noted that even though the cleansing of the banking sector seemed dire in the view of certain Ghanaians, investors deemed it a “positive move”.
A stable and well-regulated financial sector is critical to attracting foreign direct investment which is key to growing the economy that is why the perspective of the GIPC is also important to gauge investor sentiment.
Creating a robust financial sector to attract investors will engender the growth of jobs and businesses and that is a consideration that must not also be downplayed. Insolvent financial institutions pose great risks to the interest of depositors.
Business regulatory reforms to attract foreign capital is important
Still on the subject of the investing public, a Business Regulatory Reforms Portal, aimed at furnishing enterprises with needed information and assistance, has been launched.
It is recalled that Ghana moved four steps backwards in last year’s overall Doing Business ranking to 118 out of 190 economies assessed of the World Bank’s Doing Business Ranking report.
It is therefore appropriate that to make doing business attractive to both local and foreign investors and reduce the stress they often go through in getting the needed certification and permits to operate smoothly, some assistance and information is made available to them through a dedicated portal.
Minister of Trade and Industry, Alan Kyerematen who spoke at the launch observed that the closure of borders globally that came along with the coronavirus pandemic has made it more necessary to implement reforms that will attract private capital to the country.
This, he said, can be achieved if private enterprises find doing business in the country less stressful and friendly, hence, the introduction of the BRR.
The private sector has always been at the center of our development agenda, and if we are slipping in World Bank ratings with regards the ease of doing business in the country; it is important we tackle the heart of the problem if we are serious about attracting foreign capital into the country.
Ghana’s ranking declined in the ease of doing business 2020 report, the latest edition of the annual World Bank report. The report said Ghana’s drop was due to the government’s decision to convert GETFund and NHIL levies to straight taxes.
According to the World Bank, the conversion made paying taxes more complicated and more costly as they became a cost to businesses.
In 2019, the World Bank Ease of Doing Business ranked Ghana at 114 with a score of 60.4 and in 2020, the country was ranked 118 with a score of 60.