The Minister of Finance, Mr Ken Ofori-Atta, has stated that the clean-up in the banking sector embarked upon by the central bank last year has put banks in a better shape than they were two years ago.
Delivering a keynote address at an economic forum organised by the Danquah Institute in Accra yesterday, Mr Ofori-Atta stated that but for that bold decision by the government, the distressed banks could have collapsed with deposits belonging to more than 15 million Ghanaians.
"Today, we can say with confidence that our banks are in much better shape than they were yesterday (two or three years ago). They are better capitalised with more robust governance structures, portfolios much safer for depositors, broad liquid assets of up to GH¢68 billion by February this year, as against GH¢43 billion in 2016.”
"Growth in non-performing loans (NPLs) has shrunk to 14.6 per cent (as of February 2019) and credit to the private sector has increased," the finance minister said.
Mr Ofori-Atta said the government was mindful of the concerns that depositors went through last year as the central bank embarked on the radical clean-up of the banking sector.
He said the exercise cost the taxpayer about GH¢13 billion which could have been used to fix more roads, build more hospitals and schools.
Mr Ofori-Atta said upon assuming office, President Nana Addo Dankwa Akufo-Addo decided that he was going to confront the harsh truth of the situation of distressed banks.
He said the livelihoods of millions of depositors were at stake as the banking sector of the economy headed for imminent collapse.
"We could not do what others did by pretending that all is well. We could not stand by and watch a few people enrich themselves at the expense of over 15 million hardworking Ghanaian depositors who had saved for a rainy day. So we tackled it. Our decision to go ahead with the clean-up was a difficult one and we brazed ourselves for another bumpy ride, but we have pulled through with your understanding and patience," he said.
The forum was held on the theme: "Bridging the Gap between the Formal and Informal Economy: The Role of Domestic Revenue Mobilisation in an Era of Ghana Beyond Aid."
Economy in shape
Touching on the broader economy, Mr Ofori-Atta said the government was on course as it had taken measures to fix the broken economy that it inherited, saying "the broken economy is on the mend."
For instance, he said the government had reduced the stifling deficit from 7.3 per cent of gross domestic product (GDP) in 2016 to 4.2 per cent in 2018, reduced inflation from 15.4 per cent to single digit and successfully exited the International Monetary Fund (IMF) bailout programme.
Mr Ofori-Atta stated that the IMF predicted that Ghana would be the fastest growing economy in the world this year at 8.8 per cent. "We are indeed on course. Stay the course with us; it may be bumpy today but we will make the economy work again," he added.
Mr Ofori-Atta said the next phase of the development agenda was focused on industrialisation and changing the structure of the economy.
Consequently, he said the government was investing in Planting for Food and Jobs; Planting for Export and Rural Development; the One district, One factory; setting up the developing authorities and revamping the collapsed railway sector to ease movement of goods and services.
Mr Ofori-Atta said one could easily be misled that Ghana was worst off today than it was two or three years ago when one listened to some commentators in the media.
"The Ghana of yesterday did not see the planned transformation of the railway sector. We no longer have to import plantain from next door, thanks to Planting for Food and Jobs. The banking sector is more robust today than it was yesterday. Today half a million Ghanaians renew their National Health Insurance Scheme (NHIS) cards from the comfort of their homes and receive health treatment with their cards, which was not the case yesterday. We are by no means out of the woods yet, as many of us struggle to make ends meet, but the economy is in a healthier shape today than it was yesterday.
"It was only yesterday that workers and businesses were brought to their knees by ‘dumsor’ and killer tariffs. If there is something that the President is committed to, it is broad-based sustainable progress," he said.
Mr Ofori-Atta said the Danquah-Busia-Dombo tradition had ruled the country for less than 13 years in total in the 62 years journey of the country, but its contributions had impacted the lives of people, starting from K. A. Busia through to John Agyekum Kufuor and now President Akufo-Addo.
He said President Akufo-Addo was committed to taking Ghana beyond aid and urged the people to show commitment towards the attainment of that agenda.
Mr Ofori-Atta urged Ghanaians to show more commitment to nation building by honouring their tax obligations since tax revenues were needed to support development projects.
"Why do we complain of bad roads and other public services when we do not pay our taxes?" he asked and indicated that taxpayers also expected that their taxes would not be wasted through corruption.
The Commissioner General of the Ghana Revenue Authority (GRA), Mr Emmanuel Kofi Nti, reiterated the GRA’s commitment to prosecute persons who would default in the payment of taxes following the introduction of its prosecution policy document.
The document, launched two weeks ago, formed part of efforts by the GRA to enhance tax compliance on the part of businesses and the citizenry.
At a panel discussion, Mr Nti said the GRA had intensified public education and engagements on the various tax issues and that it would not hesitate to prosecute defaulters should there be an infraction of the law.
“For the greater public, compliance is key. We are going to begin to bite. To a great extent all of us have been made by the state. But for the state, most of us wouldn’t be where we are. So if the state creates a certain platform from which you make your income and you are not playing ball with the state in terms of giving back what is due it, then we will have no other option than to apply prosecution,” he stressed.
When she took her turn, the Regional Chief Executive Officer of United Bank for Africa (UBA), Mrs Marufatu Abiola Bawuah, disagreed with the GRA’s prosecutorial approach in ensuring tax compliance.
According to her, a greater concentration on prosecution could lead to tax avoidance on the part of many and that could derail the country’s revenue mobilisation efforts.
She said the GRA should rather adopt the award of incentives to organisations and individuals who would persistently honour their tax obligations to encourage others to learn from their compliance.
“It has been established that the private sector contributes about 90 per cent of employment in the country. For those of us in the private sector, I do not see how the method of punishment will help us. It would rather lead to avoidance,” Mrs Bawuah stated.
For his part, the Chief Executive Officer of the National Identification Authority, Professor Ken Attafuah, said the successful completion of the Ghana Card registration exercise would enrich the country’s database to support the GRA’s digitisation and compliance agenda.
He, therefore, urged the citizenry to participate in the registration exercise and comply with the rules associated with it to avoid infractions that could disrupt the exercise.