![](https://dailystatesman.com.gh/wp-content/uploads/2021/03/Kyei-Mensah-Bonsu.jpeg)
Majority leader, Osei Kyei Mensah-Bonsu
An amount of GHC5.5 billion is needed by the government to finalise the payment of bailout packages to various clients of some defunct fund management companies which were closed down as a result of the banking sector clean-up undertaken by the New Patriotic Party government in 2017.
This was revealed by the Majority Leader and Leader of Government Business, Osei Kyei-Mensah-Bonsu, on Friday when he presented the 2021 Budget Statement and Economic Policy of the government.
“Mr. Speaker, for the Securities and Exchange Commission to fully settle investors of the remaining 17 AMCs [asset management companies], an amount of GH¢5.5 billion (1.3% of GDP) is required. For this reason, we have come to this august House once again to seek for your approval to raise an amount of GH¢5.5 billion in 2021 to complete the asset management industry bailout,” the Majority Leader told Parliament.
Clean-up
It can be recalled that President Nana Addo Dankwa Akufo-Addo, while delivering the State of the Nation Address in January to the 7th Parliament, indicated that the government had so far expended GH¢21 billion to clean up the banking sector.
“An amount of GH¢21 billion was used to fund the cleaning up exercise. These are painful lessons we all have to imbibe,” he said.
The Bank of Ghana embarked on a banking sector clean-up, recapitalization, and other regulatory reforms from mid-2017 to end-December 2018 in line with its mandate to promote the safety, soundness, and stability of the financial system to support economic growth.
A regulatory crackdown on poor business practices and weak capital positions in Ghana’s banking sector had resulted in a series of market exits since August 2017. The outcome is a smaller but more sustainable banking industry, though this has come at a price.
A similar clean-up process, which has already resulted in hundreds of licence withdrawals, has also been applied to the microfinance and non-banking financial institutions sector.
The Securities and Exchange Commission in November 2019 revoked the licences of 53 fund management companies following the companies’ failure to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”
Resolution completed
During the presentation of the Budget Statement and Economic Policy, Mr Kyei-Mensah-Bonsu announced to the House that “the resolution of the banking industry has been completed”.
Giving updates on the payment of bailout packages to the customers of these collapsed firms, he explained that as of “the end of December 2020, government had provided an amount of GH¢3.4 billion for the payment of validated claims to investors of 30 AMCs for which liquidation orders were obtained”.
But in order to settle the payment of monies to the remaining companies, the government will need a total of GHC5.5 billion, hence the call to Parliament to approve the said amount of money.
He listed Gold Coast Fund Management Ltd (now Blackshield Capital Management), First Banc Financial Services Limited, Liberty Asset Management, Beige Capital Asset Management Ltd, Ideal Capital Partners Ltd, and Frontline Capital Advisors Ltd among the companies who customers will benefit from the payment, should the House say approve the request.