The Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, Professor Peter Quartey, has observed that the financial sector of the Ghanaian economy is picking up following the clean-up exercise undertaken by the Bank of Ghana which led to the collapse of some local banks.

Professor Quartey, while kicking against proposals for government to focus on the service sector of the economy due to its sterling performance in an interview with Joy News on Thursday September 19, 2019, said that : “If you look at employment trajectory you will find that it is manufacturing and agriculture that employ a greater proportion of the labour force.

“So if that sector is not growing as rapidly as the services sector then it becomes a problem. The financial sector grew by 1.4 per cent, it tells you that sector is picking up from the cleanup.

“So you will find that people have lost jobs in the financial sector so if manufacturing and agriculture sectors are not growing so much to absorb some these labour we are going to have a problem.”

Seven local banks have collapsed after the cleanup exercise undertaken by the Bank of Ghana (BoG).

The banks are uniBank Ghana Ltd, the UT Bank, the Capital Bank, the Royal Bank, the Construction Bank, the Beige Bank and the Heritage Bank.

Similarly, the BoG has revoked the licenses of twenty-three (23) Microfinance Institutions.

Some of the affected institutions include GN Savings and Loans Company which belongs to businessman and politician Dr Papa Kwesi Nduom, Unicredit Savings and Loans, Adom Savings and Loans, Midland Savings and Loans, Ideal Finance and Dream Finance Company.

The others are Accent Financial Services Limited, All Time Finance Limited, Alpha Capital Savings and Loans, ASN Financial Services Limited, CDH Savings and Loans Limited, Commerz Savings and Loans, Crest Finance House Limited, Dream Finance Company Limited, Express Savings and Loans Company, First African Savings and Loans Company, First Allied Savings, First Ghana Savings and Loans Company, First Trust Savings and Loans, Global Access Savings and Loans Company Limited, IFS Financial Services, Legacy Capital Savings and Loans Limited, Sterling Financial Services, Women’s World Banking Savings and Company Limited.

This move, according to the central bank, is to restore confidence in the banking and specialised deposit-taking sectors.

The BoG said in a statement that: “These actions were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent. The Bank of Ghana appointed Mr. Eric Nipah as a Receiver for the specified institutions in line with section 123 (2) of Act 930.

“The revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency. It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors.

“In line with the Government’s commitment to protect depositors’ funds, the Government has made funds available to enable the Receiver pay depositors after their claims are validated. The Receiver will in due course make an announcement with regards to when and where payments will be made. The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits. Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.”