The flagbearer of the opposition National Democratic Congress (NDC), John Dramani Mahama, has expressed concern over the effect the collapse of banks and other local financial institutions is having on individuals, businesses and especially thousands of employees who lost their jobs in the process.
Speaking during an interaction with the leadership of the Coalition of Affected Savings and Loans Customers (CASLOC), bankers and fund managers, Mr. Mahama urged the government to go beyond lip service and pay affected customers what is due them.
Former President Mahama also explained that the two previous NDC administrations deliberately encouraged more Ghanaian participation in the financial sector, expressing regret that the clean-up has affected mainly local institutions.
“We promoted indigenous participation in the financial sector because we realized that the sector was dominated mostly by foreign interests, big foreign banks… we said that this sector was such an important sector, so Ghanaians should participate in it”, he stressed.
President Mahama further said the microfinance and savings and loans companies helped in expanding the participation of indigenous capital in the sector.
“Specifically, the purpose for that was to improve small and medium enterprise lending because the big banks were not attuned to SME lending”, he added.
According to former president Mahama, before the change of government, the NDC administration had begun working to streamline the activities of the local banks, leading to the passing of the Depositors Insurance Scheme and other bills.
Institutions that were operating out of their permitted remit were also given a two-year window within which to regularise their operations.
He lamented that if the process had not been truncated immediately the Akufo-Addo government came into office, coupled with the huge increase in the minimum required capital to GH¢400 million, many of the Ghanaian owned institutions would not have been closed down, people would not have lost their jobs and deposits would have been saved.
The Securities and Exchange Commission last Friday revoked the licences of 53 fund management companies.
The latest set of license revocations by the SEC follows similar actions by the Bank of Ghana against a number of banks, microfinance companies, and Savings and Loans companies over the last two years.
Those whose licenses were revoked were found to have engaged in various infractions including engagement in related-party deals that were difficult to liquidate.
SEC also explained that the revocation is “in accordance with its mandate of protecting investors and the integrity of the capital market.”
The financial sector clean-up , commenced by the Akufo-Addo administration in August 2017, has led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.