Economists, the Private Enterprises Federation (PEF) and the Trades Union Congress (TUC) have called for restraint in how the Bank of Ghana (BoG) addresses the insolvency issues of indigenous banks in the country.
They have urged the regulator do all in its power to sustain confidence in local banks by providing the needed liquidity support in crisis times.
According to them, despite the critical roles they play in Ghana’s economy, these indigenous banks, and the domestic private sector at large, are being victimised for the benefit of the foreign private sector.
Nana Osei Bonsu, Chief Executive Officer of the Private Enterprises Federation (PEF) said foreign businesses are able to outperform their Ghanaian counterparts because they receive support from their home governments and have access to cheap finance.
“When the foreigner comes to establish a business here, first before he gets here his government is supporting him with resources to come and explore and make viability studies and analysis to make sure there is a business opportunity here. The local private sector does not get this from the Ghanaian government,” he lamented.
“When he is coming, he gets low cost funding from his country. His cost of money is 3 per cent as against his domestic counterpart borrowing at 30 per cent. He also gets tax exemptions from the government [of Ghana] which the local private sector does not get,” the PEF boss added.
He rather blamed the failure of these banks on the BoG for failing in its supervision and monitoring of their activities.
“It is very important that due diligence is applied, consistent supervision and monitoring of activities and even the appointment of managers and board of directors [is being overseen by the central bank]. It shouldn’t be because I have the money and I can come with GH₵400 million so I can appoint anyone as an MD, what does he have to be an MD? The person may be good but does not have the capacity to run a bank. So the Bank of Ghana has the ultimate responsibility to see that the people who have the requisite tools are entrusted with running our banks. That has failed,” Nana Bonsu indicated.
On his part, Senior Lecturer at the University of Cape Coast (UCC) Professor John Gatsi, noted that the continuous existence of indigenous banks provides support for the economy in general.
“Salvaging such genuine indigenous banks show our collective strength to manage crisis and secure jobs and other businesses. This is because they (local banks) have no incentive to repatriate profit out of the economy but they have every incentive to support our informal sector,” Professor Gatsi said.
He added that the remaining indigenous banks should be protected so long as they have not committed any serious criminal act that goes against the conditions of their licences.
The Senior Lecturer urged the central bank to rather quickly come up with a package to support those indigenous banks that are left and have not actually done anything that goes against the conditions of their licence.
However, Professor Gatsi cautioned that under no circumstance should taxpayers money be used to save a bank without conditions.
“If the person was not able to manage the business well that is why the bank nearly collapsed, if there are five [people] managing it, do we still keep the five there and pump our money there? The state must benefit from giving out taxpayers money to a private entity. Those are the conditions I am talking about but I’m not in position to prescribe what the conditions should be,” Professor Gatsi noted.
“The point is that taxpayers’ money cannot just be given but it must be given because we need those banks to stand firm,” he added.