A former chief economist at the Bank of Ghana (BoG), Dr. A. O. Abudu has said he does not believe the clean-up exercise by the central bank, will dampen investor confidence in Ghana.

Dr. Abudu made the comment following some assertions by critics that the approach by the central bank in cleaning up the sector could lead to a loss of investor confidence.

He told Benjamin Akakpo on Class91.3FM’s Executive Breakfast Show (EBS) on Wednesday, 9 January 2019 that:

“I’ll like to [beg to] differ. I don’t think what the central bank has done will lead to a lack of investor confidence. I think it will rather bring more confidence to the investor because something is being done."

“It’s similar to how some time ago, some punitive action was taken against our judges. It didn’t mean that investors lost confidence in Ghana, it rather boosted investor confidence that; ‘yes we are prepared to clean our own system’. So, I rather take the opposite point of view that when you come forward very clearly, unambiguously solve the problems that you have because you discovered them and you’re taking a particular action, I think that rather boosts the confidence of the investor”, he noted.

Since August 2017, nine local banks have gone under. While some of them were accused using suspicious means and capital to set up, others were also found to have been mismanaged by their shareholders.

Apart from the two recent ones, Heritage Bank and Premium Bank, the others are former Finance Minister Dr. Kwabena Duffour’s uniBank, The Beige Bank, Sovereign Bank, The Construction Bank, The Royal Bank, Mr. Prince Kofi Amoabeng’s UT Bank, and Capital Bank, which was chaired by Pastor Mensa Otabil.

While UT Bank and Capital Bank were swallowed by the state-owned GCB Bank with the blessing of the Dr. Ernest Addison-led central bank, the seven others were subsumed by an all-new state-owned bank, Consolidated Bank Ghana Limited (CBG), which was created by the Bank of Ghana during its “clean-up” exercise of the sector.