Payment of GH¢50k to customers of failed fund management companies was on compassionate grounds - Bawumia

Vice President Dr Mahamudu Bawumia has said the decision to pay each customer of the failed fund management companies an amount of GH¢50,000 was on compassionate grounds.

The Securities and Exchange Commission (SEC), acting within its mandate of protecting investors and the integrity of the market announced on Wednesday November 18 the outcome of its deliberations with government regarding an agreed social and humanitarian intervention for all remaining customers of the failed Fund Management Companies.

The SEC in a statement said the government has authorized a partial bailout which involves a partial payment of up to Fifty Thousand Ghana Cedis (GH¢50,000) to all customers of the remaining affected Fund Management Companies while the court process on the liquidation petition and other matters continue.

“The decision to make this partial payment is predicated on Government’s commitment to protect its citizenry and its sensitivity to the plight of affected clients compounded by the disruptive impact of the COVID-19 pandemic.

“Furthermore, this intervention has become necessary at this stage because liquidation petitions for the remaining affected Fund Management Companies are currently at different stages. In addition, some affected Fund Management Companies like Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited) are contesting the liquidation petition and as a result, have filed a Stay of Proceedings until its application for judicial review of the decision of the Administrative Hearings Committee has been heard.

Speaking at the nation’s builder’s update on Thursday, November 26, Vice President Bawumia said “We have stabilised and grown the economy. Prior to the Coronavirus pandemic which has impacted all economies in the world, we stabilised the economy.

“We reduced inflation; doubled economic growth in our first three years; reduced the rate of exchange rate depreciation. The exchange rate depreciation has stabilized with Ghana recording the lowest rate of depreciation in the last 28 years, notwithstanding the pandemic and the election this year. The average depreciation over the last four years (7.3%) is the lowest for any first-term government since 1992.

“Reduced the fiscal deficit (pre-COVID-19); improved our external payments position which is stronger today than it was in 2016 (notwithstanding the pandemic); Interest rates are on the decline in line with declining inflation expectations; We have cleaned up the mess in the financial sector that we inherited.

“We took decisive decisions to avoid the collapse of the financial sector, save the deposits of 4.6 million depositors, and save jobs. Thus far, the government has spent GH¢21 billion to clean up the sector. 99% of depositors of the affected banks, microfinance, and savings and loan companies have been fully settled.

“In addition to this, the government on compassionate grounds has decided to pay up to GH¢50,000 to all customers of affected Fund Management Companies while the liquidation processes continue. Based on the validated claims, this partial bailout would result in 89% of the affected individuals being fully settled.”