The founder of think tank Danquah Institute (DI) and cousin to President Nana Addo Dankwa Akufo-Addo, Mr Gabby Asare Otchere-Darko, has said it is costing in excess of GHS14 billion of taxpayer money to fix the crisis in the financial sector.
Mr Otchere-Darko’s comment comes on the back of the Bank of Ghana’s cleanup exercise in the banking and financial sector which has, so far, led to the revocation of the licences of about 420 banks, microfinance institutions and finance houses, collectively.
According to Mr Otchere-Darko, the money spent to fix the banking crisis could have been used for massive infrastructural development if the “mess” had been fixed before 2017 by the previous administration.
In a Facebook post, Mr Otchere-Darko said: “It is costing in excess of GHS14 billion of your money, as taxpayers, to fix the crisis in the financial sector. First, there is no doubt that the mess swept under the shredding carpet before 2017 had to be fixed. Since 2015, several depositors had been struggling to get their own cash from insolvent banks, S&Ls, etc. This government and the new leadership at BoG decided to put the nation first and fix it.
“Yet, what you hear, oddly enough, is that Akufo-Addo and his government are the ones rather killing Ghanaian banks! Such is the political irony of life if you underplay the need to tell your story and to do so well.
“Now, just think of the list of projects that money could have done. GHS14bn could have given us a national railway network – something never done in the entire history of Ghana and the Gold Coast. GHS14bn (if spent better than what used to be the case) could have fixed, substantially, the roads in Ghana – your roads. Just think again of how many units of affordable homes (not Seglemi prices) that size of money would have built by now and how many families would have been housed.
“Leadership is, indeed, about choices and fundamental to any economy is a sound, strong and pro-active financial services sector that is ready, willing and able to fund business, lifestyles and development.
“Remember, the very alternative which we say is still scary was the very government that less than 4 years ago, decided, as a leadership choice, to look elsewhere when the mess was all piling up. #TheAlternativeIsStillScary #GhanaOnCourse”
Some Ghanaians like the majority shareholder of the now-defunct Global Access Savings and Loans company, Dr Kofi Amoah, have wondered why Ghana did not follow in the footsteps of the United States of America, the citadel of capitalism, which saw the need to save its troubled banks and insurance companies in 2008, but rather chose the path of killing local financial institutions.
Dr Amoah told Paul Adom-Otchere’s Good Evening Ghana programme recently that the central bank could have saved the genuinely distressed financial institutions instead of annihilating them in the manner it did.
He made the following argument:
“When in 2008 because of troubles with mortgage bad securities in the United States, it created a contagion of the collapse of financial institutions around the world. The citadel of capitalism – you’ll think that, hey, if you’re a bank, you run into trouble you’ll go out of business. … But the Americans said: ‘No, we can’t do that’. They understand the economic structure of their society, they understand the critical importance of banks, and that: yes, the bank made a mistake but we cannot let it die. Do you understand? So, Hank Paulson, who was the [Treasury Secretary] at the time, went to Congress to ask for USD750 billion to rescue US banks and insurance companies. Bush, the Republican President, was the one who supported that, a Democratic Congress voted for it. They put politics aside.
“Everybody understood [that]: ‘If our banks collapse, we are dead’. They voted for the USD 750 billion. What was the money supposed to be used for? They called it TARB: Troubled Assets Reform Programme. So, they used part of this money, to go into the troubled banks, the big institutions, Goldman Sachs… huge ones, they went in there, and they bought the toxic assets, the challenged loans and all of that. Then – this is the government doing that – they bought shares in those companies. Then they sat on the Boards of those companies. The money they gave them was not free; they had an interest.
“All those companies, as you and I sit here, all the loans that they gave them have been paid, they are stronger banks now, they saved one million high-paid jobs in the US, they saved the auto industry; it’s one of the critical parts of the US economy, because if the banks went down, the auto industry would also go down.
“So, the point I’m making is: yes, we came to a point where we see that, OK, in Ghana, our financial institutions are troubled, in some cases where it was pure malfeasance, there’s nothing we can do, people are stealing; I’ll never support that. But in cases where you see that, OK, they made some mistakes, but here is an institution that has been in business for 10, 15 years, they have some managerial capacity here; not that had, they have thousands of customers, they have a lot of branches with a lot of employees, when you sack one person, the multiplier effect of that person’s salary is then wiped out. Because he can no longer go and buy bread from the baker, he cannot go and buy meat from the butcher, he cannot go and buy potatoes, he cannot go and buy this, so all these things spark a downward spiral that begins to bring your economy down.
“The banking system in Ghana should be protected, should be sacred, and it must be structured to fit with the policy set and directives of what the development programme is supposed to be. And, therefore, I’m not here to say that the Bank of Ghana didn’t do … but if you were asking me, I’d do what I can to save those indigenous Ghanaian banks that could be saved. We could have saved the jobs that we had, and all of that. How many of these people are in the streets? Thousands now”.
In his opinion, Global Access “could have been saved”, “and, therefore, to be “micromanaging and this and that and all of that, and kill some of these institutions” was unfortunate.