Maybe it is time for the country to begin a debate on the commercialization of the operations of the Bank of Ghana (BoG) to curb the losses it has incurred in recent years; this is the proposal of an economist and former technical advisor to the ex-vice president of Ghana, Dr. Gideon Boako.
Dr. Gideon Boako believes it is now time for the country to take a bold decision over the financial future of Ghana’s apex bank, calling for a national conversation on whether the Bank of Ghana (BoG) should begin operating on commercial lines to reduce mounting losses.
The legislator for Tano North’s suggestion follows the third consecutive loss reported by the Bank of Ghana, sparking public concern and political scrutiny.
After reporting a significant and unprecedented loss of GHC 60 billion in 2022, primarily due to the DDEP, the loss continued to about GHC 13 billion in 2023. The latest financial report of the Central Bank announced another loss for 2024, amounting to GHC 9.49 billion.
Despite the losses, the economist argues that Central Banks in general are not profit-making entities since they don’t operate on commercial lines.
The core functions of a central bank, including currency printing, price stability, and safeguarding financial stability, he says, are “public goods” that are typically provided free of charge.
“It is not out of place for a Central Bank to record losses, especially when the losses are basically due to operational expenses by the bank. It is high time we distinguish central banks from typical profit-oriented corporations, such as commercial banks,” he explained.
He added that, “Unlike commercial banks and other profit-oriented corporations, central banks provide public goods, and their services are not charged for. Currency printing is distributed free, and the public doesn’t pay for using the currency printed. Similarly, price and financial stability are public goods, and banks and individuals don’t pay for them.”
But considering the backlash and the wide criticisms the losses of the bank are generating, Dr. Boako suggested that Ghana might need to re-evaluate this long-held approach.
He revealed that it is not out of place for the BoG to begin operating on commercial lines and start charging for the services they render. The economist insists that his idea is not novel, as some central banks across the globe have begun operating on a commercial basis.
He justified that, “it’s important to note that all these services require financial resources to provide. This distinction sets central banks apart from commercial banks. Consequently, central banks are not profit-oriented but rather minimize losses rather than maximizing profits.”
“Central banks in some countries have begun charging citizens for these services. Perhaps we should engage in a debate in Ghana to consider this possibility,” he declared.
The consecutive losses of the banks, some economists and financial analysts say, threaten the ability of the apex bank to effectively supervise the nation’s financial ecosystem.
If not drastically curtailed, the situation could hurt the general economy in the long run, hence the need for a reconsideration of the financial future of the mother of all banks.
Amidst the backlash and controversies over the losses, Dr. Boako’s call is not a direct recommendation but an invitation to dialogue. He believes policymakers, economists, and the public must begin a discussion on this subject that will determine the financial future of the Bank of Ghana.
