Beyond the turbulence: a marketer's assessment of Ghana's banking crisis

My marketing activities took me to one of my firm’s prospective client last week. On a hot Tuesday afternoon, the essence of my visit was quite simple; to follow up on a previous fund placement discussion.

As I catalogued a couple of issues in an attempt to whip up his appetite for the services of my firm, he interrupted with a rather insightful response; ‘the whole financial sector is now in crisis.

We are all scared of the insecurity. You never know if tomorrow’s liquidation announcement will be your bank’.

What immediately engaged my attention was the impression that the banking crisis begun just in 2018. From the revelations thus far, it’s disingenuous to suggest that Ghana’s banking crisis began just recently.

The situation in my view, is akin to a huge hole covered with some layers of straw. All we needed was an Addison to take the bold step of removing the straw, revealing the deep hole beneath and taking steps to fill it up.

Given the general architecture of our banking system, I dare say the banking crisis was inevitable. The existence of fictitious audit institutions prepared to falsify financial statements to give distressed banks clean bill of health regardless of the deplorable nature of their balance sheet gives credence to the inevitability of the crisis.

Similarly, the availability of a regulator who either condoned several banking malpractices or refused to diligently carry out its legally mandated obligation also meant the issue was a ticking time bomb, waiting to explode in our faces.

How about the good number of the so- called banking luminaries who slept on their jobs and refused to carry out the sacred mandate of protecting depositors’ funds? Given the depth of these anomalies, a crisis in Ghana’s financial sector was as certain as night follows day.

The consequence of the immediate closure of six banks has been just as expected. The central bank had assured us of the job security arrangement inherent in their liquidation decision. However, the practicality of the exercise reduced their assurance to a mere cliché.

The immediate casualties of the liquidation exercise were the employees of the affected banks. The huge job losses that accompanied the sudden closure of these banks is perhaps the greatest ‘crime’ of BoG since its establishment.

The framework of our family setting is one of interdependence. When you provide one Ghanaian a job, you have indirectly catered for the feeding expense, utility bills and clothing of several individuals within the extended family.

By deduction, a single job loss to a Ghanaian sparks a completely new circle of economic hardship and further exacerbate the economic plights of the numerous mouths who depend on the individual for their livelihood.

Another catastrophic creation of the recent banking liquidation has been the ripple effect the situation has had on existing ‘strong’ banks.

Depositors who are unable to access their funds with the ‘merged banks’ are compelled to fall on their deposits with existing ‘strong’ banks.

Aside the aforementioned, the most devastating outcome of BoG’s ‘hasty’ liquidation exercise has been the loss of public confidence and trust in banking institutions. Undeniably, the success of banking is premised on confidence.

When Customers take their deposits to banks, they expect the banks to protect their deposits in consonance with stipulated banking regulations. Anything short of this is unwarranted.

The issue becomes more grievous when the narrative of the banking crisis is mirrored against the Banks and Specialized Deposit Taking Institutions Act, 2016 (ACT 930).

A thorough Perusal of these documents leaves the reader with just one conclusion: dereliction of duty by the Bank of Ghana. Simply put, who had the ultimate responsibility to see to the compliance of the law by the defunct banks?

The crisis of the Ghanaian banking sector, with its attendant woes cannot be swept under the carpet. It is a billion-dollar issue and worth the attention of government and stakeholders.

In my view, the one week (or two weeks) media lamentation that characterized the crisis and the current ad hoc reforms implemented by the bank of Ghana is not in any way commensurate with the magnitude of the problem.

The job losses, the fading banking confidence, the incompetence, ineptitude and sheer greediness of the so-called banking luminaries of the five liquidated banks, the heart-breaking panic withdrawals and the bank of Ghana’s own haphazard exercise of its legislative mandate cannot be dealt with in a wishy-washy manner. Amazingly, till date, no bank of Ghana official has been charged for any wrong doing or has resigned on moral grounds.

Given the enormity of the issue, it would be prudent if a well constituted body is established to comprehensively analyse the issues in line with the provisions of the relevant laws to unravel how and why we got to where we are.

I again submit that, the bank of Ghana must walk the talk by first demonstrating that they are up to the task. Professionals in the Bank of Ghana whose negligence led us to where we find ourselves now, must be dealt with to serve as a deterrent.