BoG blamed for financial sector mess – Research reveals

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A perception research conducted by the think tank, Institute for Liberty And Policy Innovation (ILAPI) has blamed the Bank of Ghana (BoG) for the collapse of 420 financial institutions between 2017 and 2018.

The research conducted between August and November 2022, gathered information from the public on their perceptions on government wasteful spending from 2014 to 2021 with the financial sector reforms as a variable.

The government is said to have spent over ¢25 billion in the banking sector clean-up to protect 4.6 million depositors’ funds despite quoting ¢11.7 billion in the 2020 budget statement for the same exercise.

77.5 % of the 2000 respondents were of the view that the government has wasted taxes on the banking sector clean-up due to a lack of transparency and accountability.

Executive Director, Institute for Liberty And Policy Innovation, Peter Bismark Kwofi disclosed to Joy Business at the launch of Government Waste Report at Tema.

“The decision to clean up the financial sector was an International Monetary Fund (IMF) conditionality in 2015 but the government of day failed to carry it out until the current administration took over in 2017”.

“The Bank of Ghana is not playing its oversight responsibility well. If we’re serious as a country, the governors and directors would have resigned over the mess in the sector, but the only change we see is the political appointment whereas the directors remain at post,” he said.

He wondered why the Central Bank shirks its responsibility in ensuring that banks in the country followed laid down rules and regulations in the sector.

“If BoG claims the collapsed banks acquired their licenses in a dubious way and those who facilitated the acquisitions of same are still at post, it raises questions”.

For Mr. Kwofi, the future of the banking sector is not bleak, however, a lot needs to be done to strengthen the insurance sector to help ease the burden on banks.

He said the banks would be able to withstand IMF conditionalities if they remain liquid.

According to the government, the banking sector clean-up was to ensure the orderly exit of insolvent institutions to protect depositors’ funds as well as the safety and soundness of the sector.

This decision was however greeted with discontent as it led to the loss of jobs and this was confirmed in the research.

The research revealed the government had wasted ¢73 billion on some programs and key decisions which include the banking sector clean-up.

Meanwhile, Peter Bismark Kwofi advised the government to protect local investors.

“Investment into Ghana is huge apart from South Africa and Nigeria and if the government will focus on attracting foreign direct investments as well as protecting the local investors.s the economy will be able to withstand shocks”.

“However, if the concentration is just on foreign investments, the economy will always suffer when the investors repatriate their money,” he continued.

The questionnaire-based poll used digital/online platforms including the ILAPI website, Facebook, Instagram, Twitter, and WhatsApp with volunteers from all 16 regions engaged to assist

Based on the findings, ILAPI came up with a number of recommendations.

One such is, the government needs to be ruthless in dealing with corruption to ensure transparency and accountability and enhance value for money in developmental operations and projects.


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