In 2020, the finance minister declared that if the banking industry encountered any fresh difficulties, the government would not hesitate to conduct another clean-up.
He contends that a nation’s financial system has a direct impact on both its people and its economy.
Between 2017 and 2019, the Bank of Ghana swept through the financial industry after some banks and financial organizations failed to achieve their minimal capital requirements.
Finance Minister Ken Ofori-Atta has said the government will not hesitate to step in to tackle any challenge that may rear its head in the banking sector that can lead to an economic downturn again.
He told TV3’s Etornam Sey in an exclusive interview on Monday, October 26, 2020, that the financial sector is the heartbeat of every economy globally.
A weak financial sector, he said, will have dire consequences for the economy and its people, a situation that demands that central authorities step in swiftly to address.
Therefore, he said, the Government of Ghana will act quickly to address any challenges that may emerge in the sector again after the recent clean-up exercise.
The Bank Ghana with support from the Finance Ministry swept through the financial sector of the economy between the period 2017 and 2019.
The central bank first started by revising the minimum paid-up capital for existing banks and new entrants from GH¢120 million to GH¢400 million.
According to the regulator, this was to test the viability of the banks.
The banks that were unable to meet this new requirement were either merged or collapsed.
Following this action, some nine local banks, 23 savings & loans companies, 347 microfinance institutions, 39 finance houses and 53 fund management companies closed down during the exercise.
In total, the government spent GH¢23billion to undertake this exercise
UniBank, The Sovereign Bank, The Beige Bank, Premium Bank, The Royal Bank, Heritage Bank, Construction Bank, UT Bank, Capital Bank all collapsed.
Mr Ofori-Atta said “Once you have the problem, you have to solve it because the financial architecture is the (basis) for any development.
“So whether we like or not we had to do that. Now that we have done that we move ahead.”
Asked whether if the situation presents itself the government will do it again in the same manner, he answered “You meet problems as a government that is what they elected you for and so you solve it.
“And then you begin by commissioning this to give people the sense of hope for the future to say this thing can be done, and they have faith in you so lets us go with them.
“If the engine is not functioning you can’t build on top of that so you had to solve the problem.
“Is there a way you improve on what you are doing? Of course yes there is always a way to do that but fundamentally was the approach necessary, no question about that.”