A member of the Finance Committee of Parliament and lawmaker for Bolgatanga Central, Isaac Adongo has launched an attack at the Governor of the Bank of Ghana (BoG), Dr. Ernest Addison observing that his incompetence is the real threat to the financial sector of the country.
He described his clean up exercise of financial institutions in the country as crude, clueless and haphazard revealing that the first week of June 2019 will surely go down in history as a bitter period for shareholders, directors, staff and customers of microfinance institutions (MFIs) and by extension those of non-bank financial institutions (NBFIs) in the country.
Read the full text of his statement below;
The first week of June 2019 will surely go down in history as a bitter period for shareholders, directors, staff and customers of microfinance institutions (MFIs) and by extension those of non-bank financial institutions (NBFIs) in the country. After enduring months of panic withdrawals, mean comments and a historic liquidity crunch that are the direct results of the unsavory and the unprofessional comments of no mean a person than the Governor of the Bank of Ghana, Dr Ernest Addison, the licences of 386 MFIs and microcredit institutions (money lenders) were on May 31 withdrawn for being insolvent and/or dormant.
Following the revocation of the licences, senior staff of the central bank, like the governor, have sought to justify the action and in the process, point to the next layer of the NBFIs as the next target for the Dr Addison-inspired crude, clueless and haphazard clean up exercise of the financial sector. One of those comments was to the effect that rural and community banks (RCBs) were the next stop of the exercise, which has proven to be a confidence killer than a booster.
Knowing that BoG reforms and clean up exercises mean collapse, what BoG did with that comment was that it told customers of these RCBs that their institutions were next in line to be collapsed. It was, therefore, not surprising when these discerning customers reacted to the comments by rushing to withdraw their deposits at the RCBs.
Despite the unprofessionalism associated with such a comment, it was not the first time BoG was indirectly fueling panic withdrawals by telling customers of deposit-taking institutions that it will soon withdraw the licences of the companies they do business with. One will recall that in January this year, when Dr Addison announced the conclusion of reforms in the banking sector, he said the MFIs were the next in line.
In the five months that followed, the Governor and his staff continued trumpeting that message until May 31 when they finally collapsed the 386 institutions. What this meant was that between January and May, BoG inspired a run-in on these poor institutions.
Coming at a time that the entire financial sector was and is still battling liquidity crises arising from the collapse of the nine banks and the interrelatedness in the sector, these run-ins deepened the woes of the institutions and prepared them for burial in the manner in which we are seeing. This is unacceptable and must not be allowed to continue.
Strangely, however, Dr Addison and BoG seem not to appreciate the real depth of their wayward comments. No wonder they extended them to the RCBs and noticing the backlash, are now attempting to take back their words with a lame explanation that not all RCBs were facing challenges. Suffice to say this is late and the damage of a run-in has already been done and it will continue, with clear threats of engulfing the entire NBFIs sector.
Also, the BoG’s belated statement to the effect that not all RCBs face challenges is laughable and ridiculous. It tells us of a central bank that speaks before thinking and one that is headed by a Governor who exhibits lack of appreciation of the sensitivity of the financial sector and the implications of his comments on confidence building and destruction. By that explanation, Dr Addison now expects the depositors to know by themselves those RCBs that are solvent and those that are insolvent and he expects those that are solvent to remain like sheep until he Dr Addison arrives with his usual knife dressed as a clean-up exercise.
This is the kind of disaster we have in the person of a central bank Governor who is, by no chance, an appendage of the Minister of Finance, Mr Ken Ofori-Atta, the man that is on a mission to profit from disruptions disguised as reforms/clean up exercises.
Sadly, yet expectantly, not all see and believe in this. That is why although the BoG and the government have engaged in such disastrous handling of the financial sector leading to unreasonable and avoidable job losses and excessive fiscal costs to the poor Ghanaian taxpayer, some still hold the illiterate view that their insensitive uncle will be rewarded by the victims of the mess with electoral victory. How reckless can one get for the sake of nepotistic gains?
As I have always maintained, Dr Ernest Addison is a threat to the stability of our financial sector and a disaster in central banking. If not a disaster, how could Dr Addison still be at post after listing a microfinance company as insolvent and going ahead to revoke its licence without writing to them and later admitting that it was an error? How does he expect this microfinance company to escape a calamitous panic withdrawals and collapse of its brand? If not a disaster, how could the same Dr Addison list some MFIs as solvent and in good standing when, in fact, those companies were actually dormant and their offices closed long before his daggermen arrived on May 31? What about the five banks that Dr Addison said would be capitalised by March 2018 but are yet to receive a pesewa although we are in June.
Fellow Ghanaians, the earlier we woke up and asked Dr Addison, the first central bank Governor to exhibit clear and obnoxious partisanship in his actions, comments and decisions to resign, the better.