Following former President John Dramani Mahama’s criticism of the government’s ongoing financial sector clean-up, the Vice President, Dr. Mahamudu Bawumia, has asked Mr. Mahama to save his breath, arguing that the weak oversight of the sector during his regime is largely to blame for the mess they’re now fixing.
The Vice President responded to Mr. Mahama at a ceremony to launch a 100,000 housing project at Amasaman in the Greater Accra Region.
“Instead of explaining to the good people of Ghana how his Government superintended over outright regulatory failure and cronyism which led to the biggest financial crisis ever in Ghana, he chooses, as is characteristic of him, to rewrite history. The good people of this country are however not as gullible and ignorant as he likes to believe. And we do not all have short Memories.”
John Mahama in a recent Facebook live interaction with some Ghanaians, criticized government’s handling of the financial sector clean-up that has resulted in the closure of 420 financial institutions in the last two years.
He described government’s approach as chaotic, suggesting that there would have been better alternatives rather than the closure which has far-reaching implications on jobs and depositors’ funds.
He said closing the financial institutions would have been the last resort by an NDC government, describing the crackdown in the financial sector as a “national security threat.”
Mr. Mahama promised that he will soon set up a committee to advise him on the next move when the NDC returns to government after election 2020.
But Dr. Bawumia, who had warned of the imminent collapse of 8 banks when the NPP were in opposition, insists that the banking sector troubles cannot be described as a national security threat.
“When we were in opposition we pointed out that at least eight banks were likely to collapse yet nothing was done about it. So when matters came to a head in 2017, the Bank of Ghana took a decisive step to resolve the situation. But today the response of former President Mahama is that he is going to set up a committee to tell him what to do. You have been looking at this problem since 2014; it is 2019 now.”
“When you are in leadership you take decisions when it is time to take decisions. This is just the same approach he has adopted for the free SHS and this does not demonstrate leadership. When you are faced with real crisis you take firm decisions, you don’t dilly-dally and play to the gallery. If the Bank of Ghana had waited for the banking system to collapse, it would have been a national security issue. In fact, saving depositors deposits has enhanced our national security,” he added.
The one-time Deputy Governor of the Bank of Ghana asked Ghanaians to ignore Mr. Mahama’s comments; arguing that the NDC and John Mahama have no better alternative in dealing with the mess they themselves had created.
“Has the former President not taken the trouble to learn from the experiences of countries all over the world in financial crisis management? Obviously not! Hence his admission that he has to set up a policy working group on finance and economy that is now studying and analyzing the situation with a view to coming up with pragmatic steps.”
“The former President and his NDC really have nothing useful to offer the Ghanaian people in this regard. The former President will like Ghanaians to believe that he knows how to stabilize the banking sector but he kept banks in their comatose state until they died instead of allowing the regulator to do its work independently as required by the law to administer the prompt interventions that were needed to ensure that the banks recovered. The Bank of Ghana under the current leadership has shown courage by taking the bull by the horn and dealing decisively with the problems created under the government of John Mahama to avert the collapse of the entire system.”
Dr. Bawumia says unlike the NPP that has a history of strengthening the country’s financial sector since the days of former President Kufuor from 2001 to 2008, the NDC eventually ends up destroying the gains made in the sector when they’re in office.
“Ghanaians watched painfully as gains from these far-reaching reforms implemented under the Kufour-led administration were eroded by years of no regulatory and supervisory oversight under John Mahama’s NDC administration, leading to the licensing of institutions with fake capital, poor corporate governance, and impunity as shareholders plundered the deposits of poor depositors. It is the years of poor regulation that and supervision that saw the mushrooming of licensed institutions who had no intention from the very beginning to engage in responsible banking or other deposit-taking business. If anything has shaken the very foundations of confidence and trust in the financial system, this is the reason” he stated.
Over 400 financial institutions closed down
As part of the BoG’s clean-up of the financial space, it revoked the licences of nine universal banks, 347 microfinance companies of which 155 had already ceased operations, 39 micro-credit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.