A new central bank report, dubbed ‘Summary of Macroeconomic and Financial Data’, shows that the annual growth rate of banking sector deposits has seen a continuous drop in the last three months of 2018, ending the year at 17.4 percent.

The rate of growth in deposits has dropped by about 9 percent since September 2018, when it was at 26.2 percent.

A look at the last quarter of 2018 shows that the growth rate dropped from 26.2 percent in September to 20.7 percent in October, and further dropped to 18.4 and 17.4 in November and December respectively.

The figures show only marginal increases - GH¢67.4billion, GH¢67.6billion and GH¢68.3billion in the last three months respectively.

Commenting on the data, financial analyst Prof. John Gatsi, of the University of Cape Coast, told B&FT that the decline shows depositors’ confidence in the banking sector was shattered due to the approach used by the central bank in reforming the banking sector, particularly the revocation of some licences.

“Deposit mobilisation is based on confidence in the banking sector. So, what it means is, over that period, the low confidence in the banking sector did not allow them to mobilise funds from the public effectively. And that is a key indicator of low confidence in the banking sector as a result of the approach adopted by the Bank of Ghana in reforming the sector.

“It doesn’t mean that people do not have money; what it means is that many people, especially those who were saving with the affected banks, did not have that confidence to go to another bank within that period. It may take time for them to resume confidence within the sector and trust other banks,” he said.

He again stated that the insurgence of mobile money transactions also gave people a good alternative to keep their monies away from the banks.

“And also, there are some ready opportunities for alternative safe-keeping of monies. The major one is mobile money, which has been upgraded such that people are even keeping GH¢20,000 in their mobile money wallets. So, if this money can be kept in mobile money wallet at a time when there is turmoil in the banking sector, then it is better to keep it in the mobile money wallet,” he said.

He further debunked the idea that people may have chosen to invest in Treasury bills rather than keep their monies as deposits in the banks, saying: “At that time, Treasury bill rates were also not attractive so it cannot be concluded that many people withdrew their monies and bought Treasury bills.

“Again, many do not even know that Treasury bills means it is government that is borrowing. So long as they have to go to the bank to buy it, they may feel it is one of the transactions within the banking system. So, the low confidence will also affect the Treasury bills,” he said.