Former President John Dramani Mahama has blamed the collapse of indigenous banks in the country on the refusal of the government to pay contractors for work done under his administration.

He said contractors took loans from the banks to execute the projects so the delay in payment weighs heavily on the books of the banks hence the insolvency challenges.

UT and Capital Banks were acquired by GCB Bank a year ago after they were declared insolvent by the Bank of Ghana.

Five other local banks – UniBank, Beige Bank, Royal Bank, Sovereign Bank and Construction Bank – were weeks ago merged by the Central Bank into the Consolidated Bank following liquidity challenges.

Addressing NDC delegates in Kumasi where he is currently campaigning to lead the NDC for the 2020 elections, Mahama said “so you owe contractors almost 5 billion and you say you won’t pay. You will see that if you don’t pay contractors who have taken loans from banks, they can’t also pay the banks and then the banks will collapse. Any sector of the economy people are being laid off, and the job situation has become worse.”

He added: “every step NDC is being vindicated. Because we are investing in public work, contractors are working, Government suppliers are working. When contractors are working, they buy cement, they buy iron rods, they pay their workers, traders get money, taxi drivers get money, and it makes money circulate in the system. So when you come and say you won’t pay ‘NDC contractors’; they say NDC contractor’s money will rot, that’s what Nyantakyi said and that’s the presidents friend, so coming from him it means it’s true.”