The Finance Minister’s claim that the government’s decision to pay customers of defunct financial institutions is an act of magnanimity reveals a lack of understanding of the financial sector crisis, according to Prof. John Gatsi, Dean of the University of Cape Coast Business School.
Prof. Gatsi, a finance expert, explained that the affected customers had their funds with financial institutions duly regulated by the Bank of Ghana and the Securities and Exchange Commission, not dubious companies.
In 2016, Ghana passed the Deposit Protection Act, which was amended in 2018. This Act provides that customers of financial institutions are paid compensation after the license of a financial institution is revoked.
This imposes some responsibility on government to ensure that depositors do not lose their funds entirely when financial institutions collapse.
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Prof. Gatsi described the Finance Minister’s comments as unfortunate, stating they could dampen confidence in the financial sector and erode efforts to deepen financial inclusion and reduce the unbanked population.
“The regulator didn’t announce to anybody that don’t invest in this bank, don’t invest in that one, no. So, the Minister just got it wrong. You speak like that when people invest in underground institutions like a Ponzi scheme and the rest,” he explained.
Many financial experts blame the regulators for the collapse of hundreds of financial institutions, arguing that effective supervision could have prevented the crisis.
They also criticise the government’s mass revocation of licenses, suggesting that injecting funds and appointing advisors could have kept many institutions in business and sustained jobs.
Prof. Gatsi told The Accra Times that the decision to disburse GH¢1.5 billion to customers affected by the financial sector cleanup is politically motivated to win votes.
Meanwhile, members of the Locked-up Investment Holder Forum continue to picket the Finance Ministry despite the announcement of the fund disbursement.
They argue that the amount mentioned is woefully inadequate and will not cover their lost funds.
In 2017 and 2018, government through the Bank of Ghana and the Securities and Exchange Commission caused the collapsed of hundreds of financial institutions in a sector cleanup exercise that led to many job losses, with many customers’ investments still locked up.
