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Receiver promises to pay salary arrears of collapsed microfinance firms

The Receiver of the 347 collapsed financial firms has taken steps to pay outstanding salaries and other benefits of staff whose financial institutions had their licenses were revoked.

After consultations with authorized representatives of the former employees, the Receiver said an agreement has been reached on processes of payment to begin today, Monday, July 13, 2020.

The move is aimed at easing the economic impact of the licence revocation on former employees of the affected companies in the wake of the COVID-19 pandemic.

Eric Nipah, a Director of PricewaterhouseCoopers Ghana Limited, said in a statement that: “Bank of Ghana has agreed to pre-finance the full settlement of employee-related claims, which otherwise rank as unsecured claims in the receiverships of these companies,”

The Receiver is expected to meet authorised representatives of the ex-staff “to agree on modalities for the payment of outstanding salaries and exit packages.”

“Please note that the Receiver will only fully settle outstanding salaries and exit packages of ex-staff which have been duly validated, agreed and in the resolution process,” the release added.

Meanwhile, the Receiver has also opened bids from the public to sell properties of the collapsed firms to raise money.

Over 50 used cars, landed property and chattels from the Greater Accra, Ashanti Region and Western Region have been advertised for auction.

“All interested bidders should submit their bids in a signed and dated formal letter, scanned and attached in an email addressed to the following email address, clearly indicating the item(s) of the asset(s) they are interested in and the bid amount for each asset:

Deadline for the bids is Friday, July 31 and offers which fall short of the listed requirement will be rejected.


The apex bank took action to withdraw the licences pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the BoG to revoke the licenses of a bank or Specialised Deposit-taking Institution (SDI), when it determines that the institution is insolvent or is likely to become insolvent within the next 60 days.

The BOG cited insolvency and dormancy for the move to sanitize and stabilise the financial sector after it had taken similar action against banks.

The BoG said in a statement that majority of licensed microfinance companies began to show signs of distress from 2014 onwards, as a result of severe undercapitalization, high cost of operations largely from high and unsustainable interest rates offered to depositors, poor lending and investment practices leading to inordinate losses, diversion of customer deposits into private, unprofitable and speculative ventures, general non-compliance with prudential norms, poor corporate governance, weak internal controls, and fraud, among others.

“Consequently, the financial position of these institutions continued to deteriorate, leading to their insolvency with the majority of them ceasing operations and closing their offices with depositors’ funds locked up.

“Even those that have not closed their offices are unable to pay their depositors. This has placed a substantial amount of depositors’ funds at risk,” the release pointed out.

[Ghana Report]

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