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A Financial Analyst and Chief Operations Officer at Dalex Finance Mr Joe Jackson has said local financial institutions need to be supported in order to stay in business.
Otherwise, he said, the financial sector will remain in the hands of expatriate investors.
However, he said, supporting the local banks does not mean the standard should be lowered. In his view, the standard should remain high for all banks including indigenous ones.
He said while reacting to a promise by the newly-elected flagbearer of the National Democratic Congress (NDC) John Dramani Mahama’s promise to restore the licenses of the banks that unjustifiably collapsed, on the Business Focus on TV3 Monday May 15 that “Even with hindsight, I believe that taking the license may be justified but the issue you have is that you have got to still support local banks or the financial sector, you have got to find ways of helping them along otherwise, you are going to wake up one day and your financial sector is in the hands of foreigners.
“At same time that doesn’t mean setting lower standards for your local institutions. you have got to set high standards and you have got to help them along.
“Right now, there are some institutions, local, that still have the license but are in deep trouble. You have got to ask the central bank, are you going to help them, are we creating another situation where there is going to be another cleanup? It is a huge issue to be addressed.
“The challenges in the financial sector have not ended and did not end with the cleanup, there are still troubles brewing.”
— #TV3GH (@tv3_ghana) May 15, 2023
Delivering his formal acceptance speech at the University of Development Studies (UDS) on Monday, May 15 after his victory as flagbearer of the NDC on Saturday, May 13 Mr Mahama said “we shall promote robust, local participation in our banking and financial, telecommunication, tourism, mining and agric and manufacturing sectors to grow our economy and create sustainable employment for our youths.
“We will restore indigenous Ghanaian investments in the finance and banking sector and we will create a tier banking system that will serve various segments of the market.
“We will give the opportunity to experience banking hands who were laid off needlessly to secure their careers once more and move away from the menial jobs that they were compelled to take.
“As far as practicable the banking licenses that were unjustly canceled by this government will be restored.”
Some local banks collapsed when the central bank revised the minimum paid-up capital for existing banks and new entrants from GHS120 million to GHS400 million.
According to the regulator, this was to test the viability of the banks.
The banks that were unable to meet this new requirement were either merged or collapsed.
Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies closed down during the exercise.
UniBank, The Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, UT Bank, Capital Bank all collapsed. Some analysts and observers criticized the BoG and the Finance Ministry over the collapse of the banks because in their views, these banks could have been saved to continue employing Ghanaians.
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