President Nana Akufo-Addo has said using GHS13 billion of taxpayers’ money to pay all the customers of the nine local banks that collapsed, in full, was the right thing to do.

Presenting his fourth State of the Nation Address to Parliament on Thursday, 20 February 2020, President Akufo-Addo said: “We inherited a collapsing financial sector that has led to failing banks, and considerable agony to many people”, noting: “The government is having to conjure thirteen billion cedis (GHS13 billion) to pay the 4.6 million affected customers of the banks”.

He told the lopsided chamber that: “This is money that we can ill-afford, and which would have gone to fund the many things that our communities are crying for. Properly utilised, thirteen billion Ghana cedis would work wonders with our perennial infrastructure deficit.

“But, we did think long and hard about paying all the customers of the failed banks, and we believe we made the right decision”.

The President also repeated his promise to pay, in full, all the customers of the failed microfinance and savings & loans companies. “I would like to repeat that all depositors of the savings and loans and microfinance institutions, including DKM which collapsed in 2015, will receive 100% of their deposits, too, once the validation exercise is concluded, and I am informed that the Receiver of the Savings and Loans and Microfinance institutions will begin, on Monday, 24 February, making payments to their customers, these monies, totaling five billion cedis, being in addition to the thirteen billion cedis being paid to the customers of the failed banks”.

“We hope that lessons have been learnt, and this will serve as a healthy caution to those who are offered unrealistic interest rates on deposits. I do not think it will be possible to repeat this grand pay-up in another lifetime. I want to assure Ghanaians that we are going to hold those who have been responsible for these failures of financial institutions (the supervisors and management of these institutions) accountable, a process which has already started. We expect that those whose job it is to supervise the banks and other financial institutions will do their jobs honestly and competently.

“I am very encouraged by the many corporate governance measures that have already been put in place by the Bank of Ghana, under the strong leadership of Governor Ernest Addison, to mitigate such bank failures in the future. Thanks to the banking sector clean-up, today I am happy to say that Ghana’s weak banking sector that we inherited is now well-capitalised, better managed, sound and liquid and the banks are now increasing their lending to the private sector to help propel the transformation of the economy Beyond Aid”, the President said.