Clean-Up Saved Over 7,000 Jobs

Vice President Dr. Mahamudu Bawumia

OVER
10,000 individuals would have lost their jobs if President Nana Addo Dankwa
Akufo-Addo’s administration had not cleaned Ghana’s financial sector of the
mess created by its predecessors.

Also,
as many as 4.6 million depositors would have lost their savings had the central
bank not stopped the messy financial situation that almost collapsed the
banking sector.

Such
timely intervention by government saved the jobs of over 7,000 individuals and
protected the funds of 4.6 million depositors, even though the jobs of some
3,000 people had to be sacrificed to help push the country’s financial sector
back on its feet.

Vice
President Mahamudu Bawumia who was addressing a forum organised by government
on Tuesday in Kumasi to assess its performance so far, explained, “Bank of
Ghana (BoG) did not do so just because they felt it was time to create
suffering for depositors and difficulties for the owners of those institutions,
as the NDC is forcing us to believe. Rather, the central bank did this to
protect the financial system and save the hard-earned monies of hardworking men and women…”

Institutions were already dead

Commenting
on status of the financial institutions before government’s decision to
sanitise the system, Dr Bawumia noted that “we should all note that many of
these financial institutions were dead and in many cases were not even paying
their depositors or employees at all or regularly. There were countless
instances where some customers would travel several kilometers for just a
GH¢200 withdrawal and they were told to go and come another day.”

Who is to blame?

According
to him, the failures of financial institutions were a direct result of a system
of poor licensing, non-existent capital, weak corporate governance
characterized by related party transactions, political influence peddling among
other things, adding, it has hurt so many innocent people including depositors
and employees.

Overlooked alert

He
continued, “Even in opposition, I alerted the country that on the basis of
available data, eight banks were likely to collapse but they refused to act.
Thank you to the BoG’s clean-up exercise and the government’s decision to step
in to provide financial support to ensure an orderly exit of failed institutions.”

Preliminary results from clean-up

So
far, he said over a million depositors had had access to their deposits already
and over 7,000 jobs had been saved as a result of employees taken on by GCB,
CBG or the receivers.

He
added, “Employees whose salaries and benefits had been unpaid by the defunct
institutions had been paid or are being paid by the receivers. Could you
imagine what would have happened in this country if 4.6 million depositors lost
their savings and over 10,000 individuals lost their jobs?”

Furthermore,
he noted that the benefits of the banking sector clean-up exercise were evident
for all to see adding, “We now have a stronger and more resilient banking
sector than ever and deposits in the banking system have increased
significantly as customers’ confidence in the system has rebounded.”

The status quo

The
Vice President further noted, “We should never forget that under the NDC we had
the messy liquidations of the BCCI in 1999 and the closure and liquidation by
the BoG in the year 2000, of the Co-operative Bank and Bank for Housing and
Construction, the collapse of infamous DKM and the proliferation of unlicensed
financial services such as Pyram and R-5, God is Love fan club, Menzgold and
others that took advantage of their customers.”

Mischief by opposition

However,
the Vice President lashed at the opposition for recently feigning care for
local companies.

He
said, “I find the NDC’s new found care for indigenous firms quite baffling,
given the number of indigenous firms which collapsed under four years of ‘dumsor’
under their government. Why didn’t their government bail them out? Where were
the specific policies to support them? Do they know how many jobs were lost?
What did they do about that if they cared so much about jobs? What about the
jobs of microfinance companies like DKM that collapsed under their watch? Did
those people not matter?”

He
further quizzed, “Is their idea of an indigenous financial sector one that is
characterized by fraud and unlawful activities? If you have a business and
employ someone and find out that he brought a fake school certificate and was
also stealing your money to build a house, won’t you sack him? Will you keep
him because he was from your hometown?”

BY Samuel Boadi