Professor Isaac Boadi
Dean of Accounting and Finance Department at the University for Professional Studies, Accra (UPSA), Professor Isaac Boadi, has attributed the stability of Ghana’s banking sector to the timely intervention of the Akufo-Addo administration.
“The decision to recapitalise some banks and clean the sector was the best. The entire sector would have collapsed if the Finance Ministry had not undertaken that cleanup exercise in 2017,” he stressed.
Speaking in an interview on Atinka TV’s Agenda Show, Prof. Boadi explained that the banking sector cleanup was hinged on a report bequeathed to the newly sworn-in administration, and had to be acted upon with alacrity.
“In the year 2015, the Bank of Ghana undertook an assessment of all the banks in the country. The Assets Quality Review exercise found out that10 banks were in crisis, and had to be folded up,” Prof. Boadi said.
Challenges
He stated that the challenges the 10 banks faced were attributed to insolvency because of low liquidity.
He cited mismanagement of funds injected into them by the Bank of Ghana and the lukewarm attitude towards the mismanagement of those banks by the BoG’s supervisory division as the key contributory factors.
“Per the Assets Quality Review Report, the crisis-laden banks ought to have been collapsed or consolidated, but this was never done. The Akufo-Addo administration only came to implement the recommendations of the report, hence the cleanup exercise,” he indicated.
The report, he added, also highlighted third party related transactions as one of the reasons for the crisis.
“Funds injected into the ailing banks were rather used to open other banks and engage in other unrelated businesses which affected the capital ratios of those banks. Some loans were given to certain individuals without collaterals,” he indicated.
Delay
He stressed that the delay in the implementation of the recommendations of the Assets Quality Review Report adversely contributed to the level of crisis the Akufo-Addo administration came to meet in the banking sector.
He said there was no other way for the banking sector to be rescued apart from the way it was done. He explained that BoG under the previous administration had given liquidity support to the ailing banks on more than one occasion, but these funds went down the drain as they were misused by the owners and managers of those banks.
“The then Bank of Ghana Governor’s delayed intervention allowed financial malpractices to go unchecked for too long, exacerbating the crisis in the sector. Blaming Akufo-Addo is unfair, for he rather saved the sector, contrary to what some people have been saying,” Prof. Boadi added.
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