Chief Executive Officer (CEO) of the Ghana Investment Promotion Centre (GIPC), Yofi Grant has said that even though the cleansing of the banking sector seemed dire in the view of certain Ghanaians, the critical element of this exercise was that investors deemed it a “positive move”.
In an interview with Kwame Afrifa Mensah on the ‘Epa Hoa Daben’ show, he stated: “Investors want to know your financial sector is robust and strong. The banking sector needed to be stabilized. If we didn’t do that over 4 million depositors and probably even much more would have lost their deposits. Where the banking sector was going, it needed to be stabilized. It is unfortunate that in doing that you had to clean up these institutions and restructure them and in the process, some people lost their jobs”.
He stressed that the focus of the government was not to collapse the business or jobs of people but their focus was based on strengthening the banking institutions.
“If you are working with ‘criminal’ institution and the ‘criminal institution is busted, you will lose your job. Our focus was on the institutions. We were not focused on collapsing the jobs of people. In the view of investors, that was a very positive move, because they needed to see that we had a very strong, robust and stable sector”, he added.
Apart from creating a robust financial sector to attract investors, Yofi Grant said that the government saw the need “to create an environment that will engender the growth of jobs and businesses and making sure that this country going forward will always look forward”.
As part of its efforts to restore confidence in the banking and specialized deposit-taking sectors, the Bank of Ghana embarked on a clean-up exercise in August 2017 to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.
The Bank of Ghana identified certain challenges such as the violation by many institutions of the minimum regulatory capital required, the use of depositors’ funds to finance personal or related-party projects or businesses on terms that were not commercial, among others.