Delivering his final state of the nation address to Parliament today, President Nana Addo Dankwa Akufo-Addo emphatically defended his administration’s decision to undertake a comprehensive clean-up of Ghana’s banking and financial sector. Describing it as an essential intervention, the President highlighted the urgency and necessity of the measures taken to safeguard the sector’s stability and restore public confidence.
“The banking sector clean-up was not a choice; it was a necessity,” President Akufo-Addo stated firmly. “We were confronted with an imminent collapse of the financial system, a situation that posed significant risks to depositors, businesses, and the overall economy.”
The President’s remarks come amidst ongoing debates about the impact of the banking reforms, which were launched in 2017 under the leadership of Finance Minister Ken Ofori-Atta and the Bank of Ghana (BoG). The clean-up resulted in the revocation of licenses for nine banks and over 400 other financial institutions deemed insolvent or operating below regulatory standards.
President Akufo-Addo detailed the precarious conditions that necessitated the intervention, citing gross regulatory infractions, undercapitalization, and questionable corporate governance practices within several institutions.
“Failure to act decisively would have led to systemic failures, wiping out the savings of millions of Ghanaians and eroding confidence in our financial system,” he added.
A $12 Billion Price Tag
According to the President, the clean-up exercise cost the government approximately GHS25 billion (about $12 billion), a figure he admitted was substantial but indispensable. “This was the cost of protecting depositors’ funds and preserving the integrity of our financial system,” he explained, adding that over 4.6 million depositors’ funds were saved as a result of the intervention.
Public Response and Challenges
The banking sector reforms have drawn mixed reactions from various quarters. While many analysts and international financial institutions have praised the reforms as critical to ensuring long-term stability, others have criticized the exercise for its social and economic fallout. Thousands of jobs were lost as a result of the closures, and many customers experienced significant delays in accessing their locked funds.
Addressing these concerns, President Akufo-Addo acknowledged the difficulties faced by affected individuals and assured Parliament of the government’s commitment to compensating victims and ensuring such disruptions do not recur. “Reforms are often painful, but they are necessary to lay a foundation for sustainable growth,” he remarked.
Outlook for the Financial Sector
In his address, the President pointed to signs of recovery and resilience in Ghana’s financial sector following the reforms. He mentioned improved regulatory oversight by the Bank of Ghana, enhanced capital adequacy levels across financial institutions, and renewed confidence among investors and the general public.
“Today, Ghana’s banking sector is stronger, more robust, and better positioned to support the country’s development agenda,” Akufo-Addo asserted, urging stakeholders to support ongoing efforts to strengthen the sector further.
