A financial analyst has warned the Bank of Ghana’s (BoG) directive to banks and specialized deposit-taking institutions not to pay dividend to shareholders will gravely discourage investments in the country.According to Sam Bediako-Asante, the directive from BoG “definitely will have various negative effects on the investing public”.
BoG on April 20 directed banks and Specialised Deposit-Taking Institutions (SDIs) in the country to cease declaring or paying dividends to shareholders until further notice.
The decision, BoG explained, is to ensure that banks and SDIs are better able to support their customers in the midst of the coronavirus outbreak and to absorb any potential operational losses for banks from the global pandemic.
But Mr Bediako-Asante who is the CEO of Sambed Consult is asking BoG to reconsider its decision, contending that the implication it is likely to have on the Ghana Stock Exchange, individuals and investors will be dire.
Majority of the individual shareholders of these banks, he observed, are pensioners who have invested their hard-earned monies in the companies through the Ghana Stock Exchange.
He said corporate entities, including Mutual Funds and Unit Trusts, SSNIT, and other asset management companies, including Pension Funds, are also to lose their investment incomes, which he noted will negatively impact their returns and make them unpopular.
“The Ghana Stock Exchange (GSE) will also see its trading activities going down since the most vibrant and active listed companies on the exchange are the banks. This situation can even lead to the pulling out of most players on the exchange,” he stated.
The directive, he again indicated, would 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.
“…it will be better for the BoG to reconsider its directive or decision to the banks in order for the shareholders of these companies (banks) have their due, and to cushion them financially in a time like this,” he advised.
For him, BoG should take a more humane approach in the matter