Banking Clean-up: Charge govt with causing financial loss to the state – Edudzi


Private legal practitioner Godwin Edudzi Tameklo has said the government could have used the GHS25 billion it spent on the clean-up exercise in the financial sector to rescue the nine domestic banks that went under.

He stated that the government spent GHS25 billion to tackle a GHS9 billion problem in the sector.

“The government should be charged with causing financial loss to the state,” he said on the Big Issue on TV3 Tuesday, May 16 while reacting to a promise by the newly-elected flagbearer of the National Democratic Congress to restore the license of the banks that unjustifiably collapsed.

But Kofi Tontoh, a government communicator responded to him that the government did not cause financial loss to the state.

In his view, the steps taken to address the challenges in the financial sector were necessary.

Delivering his formal acceptance speech at the University of Development Studies (UDS) on Monday, May 15 after his victory as flagbearer of the National Democratic Congress (NDC) on Saturday, May 13 he said “we shall promote robust, local participation in our banking and financial, telecommunication, tourism, mining and agric and manufacturing sectors to grow our economy and create sustainable employment for our youths.

“We will restore indigenous Ghanaian investments in the finance and banking sector and we will create a tier banking system that will serve various segments of the market.

“We will give the opportunity to experience banking hands who were laid off needlessly to secure their careers once more and move away from the menial jobs that they were compelled to take.

“As far as practicable the banking licenses that were unjustly canceled by this government will be restored.”

Some local banks collapsed when the central bank revised the minimum paid-up capital for existing banks and new entrants from GHS120 million to GHS400 million.

According to the regulator, this was to test the viability of the banks.

The banks that were unable to meet this new requirement were either merged or collapsed.

Some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies closed down during the exercise.

UniBank, The Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, UT Bank, Capital Bank all collapsed. Some analysts and observers criticized the BoG and the Finance Ministry over the collapse of the banks because in their views, these banks could have been saved to continue employing Ghanaians.