General News Fri, 23 Aug 2019

Shutdown of financial institutions a national security threat – Mahama

Former President, John Dramani Mahama says the Bank of Ghana’s crackdown in the financial sector is a “national security threat.”

The Bank of Ghana has since August 2017 closed down 420 financial institutions in the country.

Interacting with Ghanaians on social media on Thursday, Mahama indicated that, the action by the Bank of Ghana has not only threatened the survival of the affected companies, but also the country’s security.

“The crisis has created major problems in the banking sector and financial sector including deepening the already widely held mistrust and lack of confidence in the system by Ghanaians. It appears to have no end in sight. It has also dealt a significant blow to the indigenous banks because such institutions have no external support to count on. While this development appears to be a threat to only the businesses that have been shut down, it is in fact a threat to our national security. The development in the banking and finance system and the matters arising call for grave concern on all who have been affected by this financial sector turmoil especially because it is an issue that threatens the country’s security.”

He also said about 20,000 direct jobs have been lost because of the financial sector clean-up.

“About 20,000 people have lost jobs directly due to the 420 financial institutions that have been shut down. We have not even added the indirect jobs…By the time we do the total calculation, about 40,000 to 50,000 people may have lost their jobs,” he added.

During the interaction, Mahama took on the central bank and the Akufo-Addo government for revoking the licenses of the financial institutions insisting that there were other better options available.

“Was the revocation the best option at this circumstance or there was no option? Our central bank chose the chaotic situation with accompanying huge debt where the government has no clue on how to clear it.”

Mahama noted that, revocation of licenses would have been the last resort for an NDC government.

“Revocation of licenses would have been the last resort and not the first resort. No country is immune to crisis in the financial sector,” he added.

BoG’s crackdown

While some have described the actions of the central bank as harsh, others believe it is necessary to strengthen the sector regardless of the impact on jobs, businesses, and individuals.

As part of efforts to sanitise the banking institutions, specialised deposit-taking institutions (SDI), and non-bank financial institutions (NBFI) sectors, which the BoG says it has completed, the licences of nine universal banks, 347 micro-finance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions have been revoked.

The news of the revocation of licenses of some savings and loans companies in the country has resulted in many customers of the affected institutions thronging the premises of the institutions to retrieve their monies.

Source: citinewsroom.com