Nana Akomea is a Member of the Campaign Communication Team of the NPP
The governing New Patriotic Party (NPP) has accused former President John Mahama of watching aloof for the banking sector rot to fester while he was president only for him to make a U-turn with vain promises of paying the locked-up funds of depositors who were affected by the cleanup exercise undertaken by the Bank of Ghana when President Nana Akufo-Addo took office.
“Having lost control over the fight to restore sanity in the banking sector, Mr. Mahama and the NDC sat aloof as the problem metamorphosed into a full-blown crisis. A total of 9 universal banks, 23 specialised deposit-taking institutions and 386 microfinance and credit institutions, were on the verge of collapse when the NPP administration assumed power in 2017”, former Director of Communication and a Member of the Campaign Communication Team, Nana Akomea told journalists at a press conference on Monday, 21 September 2020.
According to the CEO of State Transport Corporation, “the economy risked a total collapse barring decisive mitigating measures” such as the one taken by the Akufo-Addo government to clean the financial sector.
An estimated 4.6 million depositors, thousands of retail, corporate and institutional investors, Mr Akomea noted, “were caught in the mess and risked losing their investments”.
“As I have already indicated, 82 financial institutions had collapsed under the watch of the President Mahama. In the meantime, what did President Mahama’s government have for the unfortunate customers of these financial institutions? Sadly, Ladies and Gentlemen, when these customers cried for help from government, Mr. Mahama and the NDC rather blamed them for their bad investment decisions and indicated that government was in no position to address their predicament. In fact, Mr. Asiedu Nketia, the General Secretary of the NDC is on record to have said, and I quote, ‘How can victims of the DKM microfinance scam demand that taxpayers’ money be used to reimburse them when their bad investment decisions had nothing to do with government?
“Such was the gross insensitive approach adopted by the NDC government at the height of the financial sector crisis. The empathy-driven approach of the NPP government in dealing with the crisis in the past three and half years, is in sharp contrast to Mr. Mahama and the NDC’s lack of compassion”, he noted.
Read below the NPP’s full statement:
NEW PATRIOTIC PARTY PRESS CONFERENCE
PAYMENT OF DEPOSITORS OF DEFUNCT SAVINGS AND LOANS COMPANIES
By: Nana Akomea (Former Director of Communication and a Member of the Campaign Communication Team)
1. Friends of the Media, Ladies and Gentlemen, Good day. The New Patriotic Party (NPP) appreciates your timely response to our invitation.
2. This press conference seeks to achieve three (3) main objectives:
To share the good news with Ghanaians on government’s fulfilment of its promise to pay depositors of defunct financial institutions.
To establish the role of the National Democratic Congress (NDC) in the financial sector crisis, and
To interrogate the manifesto promises of the NDC specific to the financial sector.
The NDC Caused the Banking Sector Crisis
3. Ladies and Gentlemen, let me state emphatically that the banking sector crisis we witnessed in the country was caused by the NDC.
4. It would be recalled that the 2016 Financial Stability Report of the Bank of Ghana, revealed that bad loans on the books of commercial banks in the country increased by 14.9% to GH¢4.52 billion in 2015 against the GH¢2.72 billion recorded in 2014.
5. Also, the economic and financial data from the Central Bank showed that Non-Performing Loans (NPLs) rose sharply from 11.2% in May 2015 to 19.3% in May 2016. The Central Bank under the erstwhile Mahama administration admitted in 2015 that the spate of non-performing loans on the books of banks was one of the major challenges faced by the banking sector.
6. The Central Bank stated categorically that, the level of impaired loans in one of the largest commercial banks had quadrupled and the situation was becoming widespread in the banking sector. Due to the non-payment of these loans, the banks had declared GH¢2.4 billion of outstanding debt stock of loans as bad debt.
7. You would also recall that, the 2015 Asset Quality Review of Banks, exposed significant vulnerability of banks to the economic conditions at the time. The review further stated that if the affected banks had attempted to cater for all the bad loans, a significant number of them would have collapsed.
8. Ladies and Gentlemen, you will recall, Dr. Mahamudu Bawumia, realising the bad state of the banking sector, warned the Mahama-led government in September 2016, that 8 banks risked collapse due to the increasing bad loans on their books. He stated categorically that these 8 banks recorded low capital adequacy ratios of below 10% and in some cases below 5%, leading to their near collapse.
9. President Mahama himself in addressing the state of the microfinance industry, in the State of the Nation Address in 2016 stated “Mr. Speaker, over the past five years, there has been a proliferation of microfinance companies. These companies come under the direct supervision of the Bank of Ghana. Unfortunately, lack of effective supervision has resulted in many cases in which microfinance companies licensed by Bank of Ghana have breached the rules and created supposed pyramid schemes that have eventually come crashing down”.
10. Actually in those last 5 years President Mahama mentioned, 82 of Microfinance companies had collapsed without a pesewa being paid to the unfortunate depositors.
What was President Mahama’s Response?
11. The response of President Mahama to this crisis was to throw tax payers monies at these offending financial companies.
12. Capital Bank, for instance, was given GH¢620 million in tranches of GH¢150 million, GH¢300 million, and GH¢170 million between June 2015 and November 2016, so as to recapitalize the bank to carry out its daily banking activities including granting loans, improving cash flow and honouring cheques by depositors.
13. In the event, Capital Bank literally squandered this large amount of tax payers’ money under Mr. Mahama’s watch.
14. UT Bank was given a total of GH¢860 million in tranches of GH¢50 million, GH¢150, GH¢200 million and GH¢460 million between of February 2015 and May 2016.
15. uniBank was provided GH¢3.1 billion by the Mahama-led administration, but this did not stop the difficult situation and viability of uniBank.
16. The NDC’s intervention to provide liquidity support to banks which were on the verge of collapse without effective supervision was catastrophic to say the least. Monies allocated to safeguard depositors’ funds were insensitively misappropriated by heads of banking institutions with government making no effort to demand accountability.
17. Having lost control over the fight to restore sanity in the banking sector, Mr. Mahama and the NDC sat aloof as the problem metamorphosed into a full-blown crisis. A total of 9 universal banks, 23 specialised deposit-taking institutions and 386 microfinance and credit institutions, were on the verge of collapse when the NPP administration assumed power in 2017.
18. The economy risked a total collapse barring decisive mitigating measures. An estimated 4.6 million depositors, thousands of retail, corporate and institutional investors were caught in the mess and risked losing their investments. As I have already indicated, 82 financial institutions had collapsed under the watch of the President Mahama.
19. In the meantime, what did President Mahama’s government have for the unfortunate customers of these financial institutions? Sadly, Ladies and Gentlemen, when these customers cried for help from government, Mr. Mahama and the NDC rather blamed them for their bad investment decisions and indicated that government was in no position to address their predicament. In fact, Mr. Asiedu Nketia, the General Secretary of the NDC is on record to have said, and I quote, “How can victims of the DKM microfinance scam demand that taxpayers’ money be used to reimburse them when their bad investment decisions had nothing to do with government?”
20.Such was the gross insensitive approach adopted by the NDC government at the height of the financial sector crisis.
21. The empathy-driven approach of the NPP government in dealing with the crisis in the past three and half years, is in sharp contrast to Mr. Mahama and the NDC’s lack of compassion.
What has President Akufo-Addo done?
22.President Akufo-Addo showed decisive leadership by cutting the rot that had engulfed Ghana’s financial system
23.The new administration, with new leadership at the Central Bank in August 2018, took bold decisive and pragmatic steps.
24. The 5 big troubled banks were merged to form the Consolidated Bank and capitalized it with a whopping sum of GH¢450 million.
25. The interventions that have since addressed the banking sector crisis, clearly demonstrate that bad leadership was the major problem of the erstwhile Mahama-led administration.
26. For the over 4 million depositors, 90% of them were paid cash up-front, the rest were given bonds redeemable in 5 years.
27. However, these depositors who were given bonds also happen to be the largest depositors in these banks. They had been dissatisfied with the bonds issued to them. Of course the bonds were much better than total loss of their monies if the rot had not being stopped, however, they have been making fervent appeals and cries for the situation to be improved for them.
28.President Akufo-Addo, having being deeply touched by the fervent cries of these depositors, held consultations with the Bank of Ghana to explore other ways of relieving these depositors.
29.The upshot is that, just a week ago, the Bank of Ghana, through prudent financial engineering of amending the nature of the coupons/bonds, has succeeded in monetising these bonds.
30.By this, an amount of GH¢3.56 Billion has been made available by the Central Bank to pay cash to every depositor affected by the rot.
31. This remains a monumental feat of the NPP and evidences the sensitivity of this government to the plight of Ghanaians. Cognisant of the hardships and liquidity crunch occasioned by the COVID-19 pandemic, this could be described as a prudent approach to ease the already constrained economy, boost economic activity and expedite the return of the economy to normalcy.
32. It is worthy of note that government in the first quarter of 2020 expended an estimated GH¢13.6 billion, representing 3.5% of GDP on the resolution of insolvent banks. The financial commitment made by government thus far is indicative of its resolve to create a highly robust and an internationally competitive financial sector capable of supporting the growth and development of firms, businesses and the various sectors of the economy.
33.Friends of the Media, the NPP-led government should, therefore, be highly commended for its efforts in ensuring that all depositors of the banks, specialised deposit-taking institutions and microfinance institutions are fully paid.
Empty Promises and Double Standards of the NDC
34.The NDC over the years has proven to be gravely inconsistent especially under the leadership of Mr. Mahama. One would expect that as an opposition, they would have drawn lessons from their incompetence in managing the economy and safeguarding the welfare of Ghanaians. Characteristic of the NDC, a myriad of empty promises has been made to hoodwink electorates.
35. Ladies and Gentlemen, is it not interesting that the NDC is promising to pay depositors of defunct financial institutions, when the ruling NPP has settled over 90% of the customers and is in the process of making good the rest?
36.Is it not this same NDC that superintended the collapse of the financial sector and denied depositors of DKM and other microfinance institutions any compensation? So, I ask: what has changed? I suppose your guess is as good as mine. This is an obvious demonstration of gross incompetence.
37. Friends of the Media, we all are witnesses to the unambitious proclamation by the NDC that Free SHS was only possible in 20 years. That assertion boldly exemplified their penchant for glorifying mediocrity. Today, they have made a sudden U-turn on what they hitherto considered impossible.
38.Again, under the erstwhile NDC administration, the Road Traffic Regulation 2012 (L.I 2180) which outlawed the ‘Okada’ business was passed. It is, therefore, unfathomable that the same party that criminalised ‘Okada’ business is today trumpeting the legalisation of same as a headline campaign message.
39. Ladies and Gentlemen, Dr. Bawumia’s caution of a banking sector crisis prior to the 2016 general elections only for it to occur affirms the NPP’s ability to effectively identify challenges in the economy. Sadly, not only did the incompetent NDC fail to take action to avert the crisis, but also, they emotionally assaulted victims of the financial sector crisis.
40.Asiedu Nketia’s disparaging comment added salt to the injuries of the victims.
Interestingly, the same party is today promising to “reimburse them” when elected. God save Ghanaians from such deliberate deceit!
41. Ladies and Gentleman, the NDC’s recent promise to pay customers of DKM when they earlier described the victims as reckless investors, is a manifestation of double standards. Evidently, Mr. Mahama and his NDC when in government find it expedient to cancel what is good for Ghanaians – such as the teachers’ and nurses’ trainee allowances only to promise their restoration when in opposition.
42.Such U-turns are not accidental, rather, they are clear manifestations of Mr. Mahama’s indecisiveness, lack of credibility, penchant for vain promises intended to score cheap political points and his general insensitivity to the plight of Ghanaians, particularly victims of the financial sector crisis which thrived under his watch.
43. It had to take the promise-keeper, President Akufo-Addo, to clean the financial sector mess, inject the requisite financial resources that saved existing financial institutions from collapsing and prevent the loss of jobs. By the end of October 2020, all affected persons would have received their investments in full. This can only happen under an Akufo-Addo-led government, in spite of the ravaging effects of COVID-19.
44.Let us ask Mr. Mahama whether he still considers Ghanaians as having short memories, hence cannot remember his misdeeds? Although Mr. Mahama doubts our ability to remember, his continuous display of double standards and vain promises clearly indicate the kind of leadership he offers as opposed to that of the promise- keeper, President Akufo-Addo.
45. Ghanaians have seen the light of progress and inclusive development under President Akufo-Addo. We also witnessed the deprivation, stagnation and selectivity that characterised the Mahama-led government.
46. We cannot afford to take Ghana back to the dark days under Mr. Mahama. We rather must commit to keep progress on course by voting for the NPP come December 7, 2020.
47. Thank you for your attention and may God bless our Homeland Ghana.
4 More 4 Nana, 4 More To Do More. Long live NPP!!!
Long live Ghana!!!