Since they are the ones that support local businesses, local banks are the most affected when government delays in paying local contractors – a situation which puts foreign concerns ahead of the competition by miles, Frank Adu, Managing Director of locally-owned CalBank has said.

“Local banks support local contractors, but local contractors are not treated well by government and government institutions. When local contractors are given contracts and payments from government are delayed, they don’t get the benefits of interest yet they borrow from the bank,” he told the B&FT.

“Foreign contractors deal with only foreign banks and foreign contractors get paid. You have multinational companies who come to this country and they do not deal with a local bank. So, what’s the point of local content? Is there no local content in the financial sector?” he said.

Even though the local banks that collapsed recently might have had some weak lending practices and weak governance issues, the conditions under which local businesses operate partly contributed, he said.

In August 2017, the Bank of Ghana allowed the purchase and assumption of Capital and UT banks, two local banks, by GCB Bank.

Six months later, uniBank – another local bank – was placed under the administration of KPMG.

The central bank has also recently appointed an advisor to guide Sovereign Bank, another local bank, onto to a healthy footing due to governance and capitalisation challenges.

The remaining local banks, some 17 of them, have made no secret of the fact that they are struggling to meet the central bank’s December deadline for them to raise GH¢400million each as minimum capital.

According to Frank Adu, if government were to pay contractors on time, raising the minimum capital would not be so difficult for some of the banks.

“The central bank is asking us to recapitalise. What is the total debt in just the road sector to banks? Let’s just a say it is GH¢2billion: that is GH¢400million for five banks. So, it’s unfair to ask shareholders to bring equity when you owe shareholders so much money that if you paid, the level of equity that they’d be raising would be reduced,” he said.

“We have a problem; we need to protect our local banks. Government should use its efforts to help these local banks succeed,” he added.

When they met President Akufo-Addo recently, the local banks made a strong case for government to come up with deliberate policies, just like Malaysia and Nigeria did, that would support them so they can also prop-up Ghanaian-owned businesses.

Government last year said it had paid over GH¢1billion to contractors who had been owed various sums. Despite the claim, many bankers and contractors, especially road contractors, have said nothing much has changed and that it is just a part of the debt.

Earlier this year, the Association of Road Contractors appealed to government to speed-up the processes it is following, to pay monies owed them for the construction of roads in cocoa-growing areas.

In 2015, government launched a US$150m project to improve road infrastructure in cocoa-growing communities. The project has since been put on hold, but the contractors are demanding payment for the job done so far.

“With regard to the cocoa roads, government has not made any payment since October 2016; we have been meeting management of COCOBOD and they promised us they were going to issue a statement in that regard,” said the National Chairman of the Association of Road Contractors, Daniel Agroh.