20th May 2024

Minister of Finance

It has emerged that while the opposition NDC continues to castigate the Akufo-Addo government over a financial mess in which its cronies were beneficiaries, the government had arranged funds to the tune of GH₵7.6 billion to clean up the mess for the sake of groaning depositors.

This includes a staggering GH₵669 million for victims of the DKM Ponzi Scheme in which thousands of Ghanaians were caught, with the former President and his functionaries turning a blind eye to the financial illegality.

The Daily Statesman has gathered that for all depositors of the failed micro finance, finance houses and savings and loans companies to be fully settled, the receiver had to extend the deadline for the validation of claims.

During this time, he recorded a total of new depositor claims in excess of 143,000, valued at GH₵1.76billion, out of which GH₵1.07 billion has been duly validated.  The GH₵1.07 billion validated claim has a cash component of GH₵613million, with the remaining GH₵457million being payable in bonds.

To effectively roll out the intervention initiative, Fund Managers (FMs), as part of the Depositor Payment Scheme under the resolution process, were to receive payment of up to GH₵170,000 in cash and the remaining in bonds.

GH₵1.5bn handy

Our information indicates that the FMs have since received payment amounting to approximately GH₵1.5billion. While GH₵117million was paid in cash, the remaining GH₵1.38billion was paid in bonds. The FMs have, however, expressed concerns that the GH₵1.5billion is not sufficient to help resolve liquidity challenges in the industry.

To resolve this, the Receiver, the Securities and Exchange Commission (SEC) and the Ghana Securities Industry Association are proposing adjustment to the payment structure for FMs. They have proposed 20 per cent cash and 80 per cent bond payment for validated claims above the cash threshold of GH₵170,000. This is to bring them to par with other depositors of the resolved institutions.

DKM debt

Available information also indicates that the Depositor Transfer Scheme instituted in 2016 to pay all valid claims of customers of DKM received total claims of 90,353, valued at GH₵669 million. After a validation exercise, a total claim of 88,962 was accepted valued at GH₵646 million. Out of the validated claim, a total amount of GH₵329 has been paid from the initial amount of GH₵400 million made available by the Bank of Ghana, leaving an unutilised amount of GH¢71 million.

Meanwhile, the Receiver is requesting an additional amount of GH₵1.545 billion to enable him pay fully the depositor claims of the resolved financial institutions.

We can report that an amount of GH₵1.7 billion (in bonds) has been made available by the government to meet the additional funding requirement by the Receiver. The amount is GH₵1.545 billion, and the remaining GH₵155 million will be utilized to fund part of a proposed micro lending project to SMEs, which is currently being implemented by Consolidated Bank Ghana (CBG) and Jumia. This initiative is in line with the government’s policy of digitisation.

This brings the total expenditure on the financial sector interventions for the SDIs and MFIs to GH₵7.625 billion.

Painful, but expedient

The decision to spend taxpayers’ funds on the bailout has been a painful exercise, and deprived the government of resources which could have been used for infrastructure development and other critical expenditures.

In 2019, the Bank of Ghana revoked the licences of 23 Specialized Deposit Taking Institutions (SDIs), and 347 Micro Finance Institutions (MFIs) due to various regulatory breaches.  Subsequent to that, about 4.6 million depositors’ funds were saved. That required the government to strategise to bailout depositors of the defunct financial institutions. The government therefore made available funds in an amount of GH₵925 million to salvage depositors of the resolved SDIs and the MFIs.

Also, with the President’s directive in March, 2020 that all depositors of the resolved SDIs and MFIs must be fully paid, an amount of GH₵5billion (in a combination of cash and bonds) was spent through the Receiver’s paying agent, CBG, to fully settle all affected depositors of the resolved entities.

Source: Daily Statesman

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