This comes after Parliament recommended that the government settle 61,000 customers of defunct Gold Coast Fund Management following their petition to the House.

The Chairman of the Special Committee set up to investigate the demands of these customers, Joe Ghartey, addressing the House noted that the government must honour its promise to repay the investors.

“We urge the government to do its part in terms of prosecuting the matter and following it in court so that the question of whether they should be liquidated or not will come to an end so that further payments can be made,” he said.

Following this recommendation, the government is expected to spend an amount of GH₵9 billion to settle these customers.

This adds up to the GH₵25 billion already spent on the clean-up exercise, according to former Finance Minister Ken Ofori-Atta.

The Committee further recommended that insurance be included in all these financial decisions to ensure the cost of the collapse of these institutions does not become a burden on the government.

“We recognise the fact that this House passed the Ghana Deposit Protection Act 2016, and it was passed to protect depositors. We cannot continue at this rate where people set up financial institutions and then they collapse and the last resort is government.

“The government cannot continue being a guarantor between institutions and the people of Ghana. Therefore, one way to go around this is for us to insist that when you are making such investments you take insurance,” he noted.

The research conducted between August and November 2022, gathered information from the public on their perceptions on government’s wasteful spending from 2014 to 2021 with the financial sector reforms as a variable.  

Government is said to have spent over ¢25 billion in the banking sector clean-up to protect 4.6 million depositors’ funds despite quoting ¢11.7 billion in the 2020 budget statement for the same exercise.  

Some 77.5 % of the 2000 respondents were of the view that the government has wasted taxes on the banking sector clean-up due to a lack of transparency and accountability.

Executive Director, Institute for Liberty and Policy Innovation, Peter Bismark Kwofi, disclosed to Joy Business at the launch of Government Waste Report at Tema.

“The decision to clean up the financial sector was an International Monetary Fund (IMF) conditionality in 2015 but the government of day failed to carry it out until the current administration took over in 2017.

“The Bank of Ghana is not playing its oversight responsibility well. If we’re serious as a country, the governors and directors would have resigned over the mess in the sector, but the only change we see is the political appointment whereas the directors remain at post,” he said.

He wondered why the Central Bank shirks its responsibility in ensuring that banks in the country followed laid down rules and regulations in the sector.

“If BoG claims the collapsed banks acquired their licenses in a dubious way and those who facilitated the acquisitions of same are still at post, it raises questions”.

For Mr Kwofi, the future of the banking sector is not bleak, however, a lot needs to be done to strengthen the insurance sector to help ease the burden on banks.

He said the banks could withstand IMF conditionalities if they remained liquid.

According to the government, the banking sector clean-up was to ensure the orderly exit of insolvent institutions to protect depositors’ funds as well as the safety and soundness of the sector.

This decision was however greeted with discontent as it led to the loss of jobs and this was confirmed in the research.

The research revealed the government had wasted ¢73 billion on some programmes and key decisions which include the banking sector clean-up.

Meanwhile, Peter Bismark Kwofi advised the government to protect local investors. 

“Investment into Ghana is huge apart from South Africa and Nigeria and if the government will focus on attracting foreign direct investments as well as protecting local investors the economy will be able to withstand shocks”.

“However, if the concentration is just on foreign investments, the economy will always suffer when the investors repatriate their money,” he continued.

The questionnaire-based poll used digital/online platforms including ILAPI website, Facebook, Instagram, Twitter, and WhatsApp with volunteers from all 16 regions engaged to assist

Based on the findings, ILAPI came up with a number of recommendations.

One of such is, the government needs to be ruthless in dealing with corruption to ensure transparency and accountability and enhance value for money in developmental operations and projects.

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The president stressed the point that despite the associated job losses and pain caused, the clean-up was necessary as there was a bigger picture to the clean-up exercise.

“There were reports by the World Bank, IMF and even the BoG which we saw when we came to office, foretelling the total collapse of the banking sector if nothing was done to stop it and so we had to do it,” he said in an interview on University of Cape Coast-based Atlantic FM, monitored by adomonline.com.

“It was one of the most difficult decisions I had to take, but these are the inescapable parts of governance, so yes there were job losses and pain was caused but there was a broader picture which is the progress and betterment of the economy,” he noted.

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The New Patriotic Party government in August 2017, embarked on a clean-up exercise of the financial sector due to the insolvency of the banks and other financial institutions in the country.

Nine indigenous banks, 347 micro-finance institutions, 15 savings and loans and eight finance houses were collapsed in the banking sector.

The Veep who was speaking at a town hall meeting about his government’s achievements said then decision by the NPP to clean the sector showed competence of the Akufo-Addo led government.

“The banking sector clean-up was to protect the financial system and the NDC was aware of the problems as far as 2015 for banks and 2012 for microfinance, savings and loans but had no courage to deal with the sector clean up,” he said.

He said the NDC’s decision not to deal with the problems facing the sector could have collapsed Ghana’s financial system.

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“They are now going around saying they will pay depositors their money; you couldn’t even pay teachers’ allowances and you are saying you can pay depositors,” he quizzed.

The Vice-President reiterated government has already spent 13 billion on the exercise which was unplanned and questioned where the NDC would have acquired such monies from.

He gave the assurance that depositors’ monies will be paid in full since the sector clean-up was through no fault of theirs.

The Bank of Ghana in 2019 as part of sanitizing the financial sector revoked the licences of 9 universal banks, 347 microfinance companies and 39 microcredit companies.

Fifteen savings and loans companies, eight finance house companies, and two non-bank institutions were also affected.

According to the Bishops, although the revocation of licenses by the Central Bank is justified and was necessary to save Ghana’s financial sector, government’s utmost intervention is needed in funds recovery.

“To the extent that the exercise [financial sector clean up] is meant to protect depositors from losing their hard-earned monies, we commend the Central Bank.”

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The Bishops stated this in a communiqué containing resolutions taken after the group’s annual plenary assembly.

“We are, however, concerned about many Ghanaians whose monies have been locked up in these defunct institutions with no hope of redeeming their investments and appeal to the government to help these people recover their monies,” the statement added.

Meanwhile, the Bishops urged the government to “consciously protect indigenous financial institutions that are only starting, from being swallowed up by the big international and other powerful financial institutions”.

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The financial sector clean-up started in August 2017, has led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, 8 finance house companies, and two non-bank financial institutions over issues of maintaining the minimum capital requirement.

The most recent was the Securities and Exchange Commission (SEC)’s revocation of licenses of some 53 Fund Management Companies said to be managing a customer base of about 56,000 whose funds run in excess of GH¢8 billion.

According to the Communications Minister, government had to take drastic but necessary measures to safeguard funds of depositors and to avoid collapse of Ghana’s financial sector.

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“We inherited a bad financial sector and we decided to take drastic measures to fix things and that was why we undertook the banking sector clean up,” she explained.

Speaking on Adom TV’s Badwam, the Minister who doubles as MP for Ablekuma North said Ghana needed a visionary President like Nana Akufo-Addo and a bold Bank of Ghana governor for the banking sector clean-up.

“If we stood aloof and did nothing like the NDC with regards to the financial sector, things would have collapsed on all of us and we would have completely run down the economy,” she said.

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On the GHc14 billion invested in the banking sector clean-up, Tthe Minister added “the money is being used to support the CBG in order to keep them in business, pay their debts and also undertake liquidation processes”.