The last two and half years have seen several banks, investment companies and microfinance companies closed down. First the UT and Capital Banks were consolidated after the Central Bank deemed both institutions insolvent.
Then five more banks – Beige Bank, Sovereign Bank, Royal Bank, Construction Bank and UniBank – were also dissolved to form the Consolidated Bank of Ghana. Towards the end of 2018, gold dealership firm Menzgold Ghana Limited was also shut down by the Securities and Exchange Commission (SEC) over licensing issues. On May 31, the BoG revoked the licenses of some 347 microfinance companies in the country.
This has led to lamentations from affected workers and institutions, with many describing the government as insensitive. However, the fact is that the cleansing of the financial sector was a very necessary measure. While many have lost their jobs and savings in the process, many more could have lost theirs if the government had not intervened earlier. The government has had to spend about GH¢11.2 billion already in order to secure the funds of depositors of the collapsed banks. Imagine if the rot in the financial sector is allowed to continue, then it would mean more people would be affected and the government would have had to spend more to save the situation.
Another good thing about the BoG’s cleansing of the financial sector is that there will now be responsible operation by the various banks. Most of the collapsed financial institutions were being run on debts and were therefore not sustainable. Now, there are stricter regulations guarding the financial sector and this should help keep some sanity among the various institutions.