Banking expert Dr. Richmond Atuahene expressed serious doubts about how Consolidated Bank Ghana (CBG) is being managed after the Bank of Ghana (BoG) recently put a hold on CBG’s license to trade foreign currency.
The Bank of Ghana has temporarily suspended Consolidated Bank Ghana’s foreign exchange license for one month, starting on November 26, 2024. This action comes after the BoG identified multiple violations in how CBG handled its foreign exchange operations.
In a November 12 statement signed by Secretary Sandra Thompson, the BoG noted that the suspension was enforced under section 11 (2) of the Foreign Exchange Act, 2006 (Act 723).
Speaking on Morning Starr with Naa Dedei Tettey, Dr. Atuahene pointed to deeper, ongoing issues within CBG, calling for thorough investigations and independent oversight to restore public trust in the financial system.
Dr. Atuahene raised questions about the management at both CBG and the BoG, indicating a trend of lax oversight and repeated rule-breaking. He emphasized that CBG has had long-standing compliance problems, failing to properly report foreign currency dealings to the central bank and contributing to an outflow of valuable foreign exchange resources.
“The role that we’ve been saying about good corporate governance, we know the state institution governance is nothing to write home about,” Dr. Atuahene stated. He emphasized that the core problem is a governance lapse, not only at CBG but also within the BoG’s supervisory division.
CBG, which was established through a merger of several distressed banks as part of the BoG’s banking sector clean-up in 2017-2018, serves as a state-owned financial institution and is expected to adhere to strict compliance guidelines to avoid repeating past crises.
Dr. Atuahene further alleged that CBG has engaged in remittance practices that circumvent the BoG’s foreign exchange regulations. He claimed that, in many cases, CBG converted incoming foreign remittances into Ghana cedis without receiving the equivalent foreign currency, resulting in a net outflow of foreign currency and undermining the nation’s economic stability.
“The remittance is what is happening with that. They’ve created cedi wallets, and the cedi comes in, and the dollar doesn’t come, the euro doesn’t come, the pound doesn’t come,” he said.
Using data from the BoG’s 2023 audit and financial reports, Dr. Atuahene claimed that inadequate transparency has led to significant underreporting of foreign currency earnings. He stated that CBG’s practices have not only violated the Foreign Exchange Act but have also weakened the cedi by restricting foreign currency flow within the economy.
Dr. Atuahene also criticized BoG’s one-month suspension of CBG’s forex license, arguing that it lacks substance as a real solution. He advocated for an independent forensic audit, potentially involving organizations like the International Monetary Fund (IMF) and the World Bank, to thoroughly examine the foreign exchange discrepancies.
In Dr. Atuahene’s view, such actions would ensure that remittances are accurately recorded, reducing the leakage of foreign currency from Ghana’s economy. He suggested that if these issues are addressed properly, the country could recoup billions in remittance inflows, easing the burden on the cedi.
By the close of Tuesday, November 12, the cedi showed a slight appreciation in the exchange rate, but Dr. Atuahene cautioned that this movement is misleading.
He argued that the official exchange rate doesn’t reflect the reality, as the actual rate is much higher in forex bureaus and informal markets. He described the central bank’s attempts to sustain an artificial rate as a short-term solution that overlooks core economic challenges.
Expressing doubt that CBG could address these issues within a month, Dr. Atuahene characterized the suspension as inadequate for resolving the bank’s deeper issues.
Dr. Atuahene emphasized, “It’s time for us to appoint an external consultant to do a due diligence and to find how much money has been externalized and how they were using the cedi wallet to pay without accounting for the euro, the pound, [and] the dollar.”
The BoG has not yet addressed Dr. Atuahene’s request for an independent audit. However, financial experts suggest that an external investigation could pave the way for lasting reforms. Many Ghanaians are hopeful that improved transparency and compliance with foreign exchange standards will help stabilize the cedi and protect Ghana’s financial sector from future challenges.
With the month-long suspension now in place, the public is watching to see if the Bank of Ghana will take up Dr. Atuahene’s recommendations, possibly marking a new chapter of accountability and stability in Ghana’s banking sector.