The Executive Secretary of the Ghana Association of Savings and Loans Companies (GHASALC), Tweneboah Kodua Boakye, has revealed the association expected the collapse of the twenty-three (23) Microfinance Institutions because, in his view, there were a number of institutions that were suffering as a result of uncertainties in the financial market.

The Bank of Ghana (BoG) on Friday August, 16 2019 revoked the licences of 23 insolvent savings and loans companies and finance house companies.

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 has also 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.”

Reacting to the news on Accra-based Citi FM Friday August 2019, Mr Boakye noted that over 2000 workers are going to lose their jobs.

“We are looking at employees in excess of 2,000. That is for the 15 savings and loans companies on the list,” he said.

He added: “We have heard the news, we have seen the publication. We have been expecting this because there were a number of institutions that were suffering as a result of these uncertainties in the market.”

He further stated : “There was an unfounded list going round but now the central bank has settled this. From the BoG list, it means that there are 24 savings and loans companies left in the market to do business. So we want to encourage the public to remain calm. This has happened and we were all expecting it. Let us support the companies that are left. Let’s support the system and the receivership process. If we are able to do this, I am very confident that the sector will be stronger.”