No dividend payment directive by BoG to discourage investments - Finance Expert

The directive by the Bank of Ghana to banks to refrain from paying dividend to shareholders this year until further notice would negatively impact on the investing public and deter many people from investing.

According to a financial consultant, Sam Bediako-Asante, the Central Bank should reconsider its directive to the banks in order for the shareholders to have their due from investing, and to also cushion them financially in the COVID-19 era.

“The BoG's directive would definitely create a vicious circle within the economy and make investments in the country a no-go area taking into account how so many citizens have lost their investments to the collapsed financial institutions post the financial sector clean-up”, he said.

Chronicling various implications if the dividends are not paid, Mr. Bediako-Asante said individual and corporate shareholders will not have any income through their investments in these banks, adding “but it must be noted that majority of the individual shareholders are pensioners who have invested their hard-earned monies in companies (banks) through the Ghana Stock Exchange.”

Secondly, he mentioned that corporate entities, including Mutual Funds and Unit Trusts, SSNIT, and other asset management companies, including Pension Funds, would lose their investment incomes, that will negatively impact their returns to investors thereby making them unpopular.

According to him, such situation began even before the emergence of the COVID-19.

Thirdly, the decision by the BoG, he said, will make the GSE perform poorly for two years running.

“And, could this possibly lead to the GSE having problems joining the proposed broader West Africa Stock Exchange (WASE) platform”, he added.

He expressed surprised about the banks collaborating with the BoG to take such decision since they also want to avoid paying dividends to shareholders.

“Meanwhile in denying the shareholders their due, members of the Board of Directors and management (of these companies) have already taken their "part of the cake" in terms of fees and allowances for members of BoDs, and salaries and allowances for the management.”

He concluded saying he “Hope the BoG would listen this time round and take a more humane approach in this matter for shareholders/investors have already suffered too much through losing their investments in the collapsed financial institutions, namely the Microfinance institutions, Savings & Loans Companies, other Asset Management companies, and the delisted former UT Bank.”