The Bank of Ghana has been cracking down on companies mercilessly over the past year or so, with numerous financial institutions declared insolvent and their licenses revoked.
The latest round of closures occurred Friday with a statement announcing that 23 savings and loans companies, including ‘big’ ones such as GN and Midlands, have all had their licenses revoked.
The action has become necessary, the Bank of Ghana argues, because these companies have become insolvent and are unable to honour the requests of customers.
But a chat between GhanaCelebrities.Com and an insider in the industry paints a different picture, one in which government’s own actions might have led to the current state of affairs.
According to our source, a big reason most of these companies have gone under is related to government itself, in that their inability to pay contractors has left some financial institutions with bad loans which they are unable to retrieve.
It is alleged that the government provides guarantees to contractors to go for loans to enable them to execute government projects, but then fail to pay them on time after the project. They then accrue huge interest on their loans which they are unable to pay and which becomes an albatross around the neck of the company which granted them the loan.
This potentially draws a straight line between government’s own actions and the distress of these companies.
Another problem is how customers of these banks who go under rarely end up getting back their investments. Sanitizing the system should end up with the customers receiving their due since that is the rationale for everything being done, but rarely does that happen and it’s leaving Ghanaians as the ones suffering at the end of all these closures (same with Menzgold).
Sanitizing the system should lead to the ideal solution where every customer goes home happy, instead deposits and investments remain locked in insolvent companies whilst the banking sector looks more and more unreliable to Ghanaians.
The closure of these banks is just a new way to build a monopoly, the insider alleged, to allow companies owned by NPP ‘big men’ or businessmen affiliated with them to flourish. The claim is that by ‘taking out the competition’, this can allow their chosen businesses to thrive and make more money for those at the top.
The NDC was continually accused of ‘create, loot and share’, and our source alleges this is just the NPP’s own way of doing the same thing.
If the system is being cleaned with such ‘dirty hands’, the reforms might never work and all that happens are people losing their investments whilst more Ghanaians become unemployed. In the end, it is Ghanaians who continue to suffer whilst not getting the change we were promised.
What do our readers think? Is government having another motive in mind with these closures or are genuinely trying to ‘sanitize’ the banking industry? Let us know as we all inevitably wait for the next round of closures.