Using GH¢21 billion to collapse 9 banks partly to blame for Ghana’s economic crisis – Adei

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Prof. Stephen Adei, former Board Chair of the Ghana Revenue Authority
Prof. Stephen Adei, former Board Chair of the Ghana Revenue Authority

Economist Prof Stephen Adei has said Ghana is currently going through an economic crisis partly because the Akufo-Addo-led government used GH¢21 billion to collapse some nine banks and other financial institutions.

Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies have been closed down since 2017 under President Nana Addo Dankwa Akufo-Addo in a financial sector clean-up exercise.

Two banks, UT Bank and Capital Bank, were first taken over by GCB Bank in a purchase and assumption agreement.

Seven others, the Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank and UniBank, had their licences revoked and placed under the Consolidated Bank Ghana.

As a result of the banking sector reforms, the Bank of Baroda willingly folded up and exited.

Also, six banks merged. First Atlantic Merchant Bank Limited and Energy Commercial Bank merged into one; OmniBank Ghana Limited and Bank Sahel Sahara Ghana merged, and First National Bank and GHL Bank Limited also merged.

Ghana now has 23 functional universal banks in the country.

Speaking to Kwame Obeng Sarkodie on Accra100.5FM’s morning show Ghana Yenson about the current economic crisis in Ghana, the former Chairman of the National Development Planning Commission (NDPC), said: “The truth is that times are hard because inflation is 15%, the price of petrol has doubled, and the cedi has depreciated”.

In his view, “half of the fault is not from the government while the other half is the fault of the government”t.

For instance, he said, the Russian-Ukraine war and COVID-19 pandemic cannot be blamed on the government since it had no control over them.
On the other hand, the former Rector of the Ghana Institute of Management and Public Administration (GIMPA) said: “What the government can be faulted for is that they wanted to do so many things at the same time when they first came into power and, so, they borrowed so much”.

“So, the huge debt is killing us now, especially when the borrowing has not yielded any fruits yet,” he noted.

Secondly, Prof Adei added: “In my opinion, the manner in which they collapsed some banks and financial institutions with GH¢21 billion is partly responsible for the country’s economic crisis”.

Thirdly, he said the size of the government and the public sector wage bill have also not helped the situation.

He, however, noted: “I believe if they commit to the things they have promised to do, things will start getting better by the end of the year”.

Source: GhanaWeb