The ongoing debate for some local banks whose licences were revoked during the banking sector clean up exercise to be reinstated is gaining ground as some experts believe it is a step in the right direction.
Economist, Dr. John Kwakye and Finance and Banking Consultant, Dr. Richmond Atuahene are the latest to voice strong concerns about the negative impact of the dominance of foreign-owned banks on the banking sector and the economy in general.
This campaign to reinstate the licence of some local banks affected by the financial sector cleanup was launched by the founder and Chief Executive Officer (CEO) of the defunct GN Bank, Dr. Papa Kwesi Nduom. His bank was a casualty of the exercise which he believes the circumstances for the collapse of GN Bank were bizarre. He has cited political and witch-hunting reasons for his predicament. He has since been on an agenda to ensure that the new government restore his license.
The new heightened calls for the restoration of local banks come on the heels of the nomination of a new governor of the Bank of Ghana, Dr. Johnson Asiama. The immediate past governor, Dr. Errnest Addison during his tenure emphasized there was no way those licences would be restored under his leadership.
Amidst the debate, Dr. Kwakye and Dr. Atuahene agree that it is dangerous for critical sectors of the economy such as banking and finance, manufacturing, telecommunication, oil and gas, among others to be mostly owned by foreigners.
The two say the outcome of the financial sector cleanup exercise mostly disproportionately affected local banks after a large of them were made defunct affecting the ownership structure of the sector.
In an interview monitored by The High Street Journal, Dr. Kwakye argued that financial sector cleanup, which led to the collapse of several indigenous banks, could have been handled differently to preserve local ownership.
“We are in a situation now where we have reduced the local ownership of our banking sector. And that’s not good enough for us. As a country, we should be working towards increasing our ownership, Ghanaian ownership of almost all sectors. The extractives, banking, manufacturing, telecoms,” Dr. Kwakye remarked.
He added, “We should be increasing our ownership of all these sectors. Now we have shrunk the Ghanaian ownership of the banking sector. There should be a conversation about how do we restore Ghanaian ownership of the banking sector.”
The financial analyst and banking consultant, Dr. Atuahene reinforced these sentiments, emphasizing the broader economic risks associated with excessive foreign control of Ghana’s strategic sectors. He cited the banking, telecommunications, and mining industries as key examples of areas where Ghanaian ownership should be prioritized to prevent economic vulnerabilities.
He therefore believes the new BoG Governor must take a cue from Nigeria where the country has been deliberate and successful in protecting its indigenous banks. He further points out that increasing Ghanaian ownership will ensure economic stability, retain capital, retain profit, and strengthen the ever-free falling cedi.
“If you have telcos who control about 90-80% of the telco systems, they are not Ghanaian businesses After every year, they repatriate the profit. No country in this world would like to let its banking system or strategic business go into foreign hands, except Ghana. A clear example is Nigeria. Nigeria’s banking system, protects the indigenous bank to such an extent that the foreigners who go there cannot compete,” he argued.
He also embraced the calls for the restoration of the local banks to be considered. He believes implementing such ideas will safeguard the country’s banking sector and provide protection for the financial sector from what he calls external “seismic risks.”
“If anybody comes with that strategy that we should look at strategic ownership by Ghanaians, we should encourage them. We should encourage them. Otherwise, we are going to sell our birthright. And see the danger, the danger even with the foreigners is that anytime there is a seismic risk in your country, it will destroy your system,” Dr. Atuahene suggested.
Already the new government, in the round-up to the 2024 general elections committed to reassessing the financial sector cleanup exercise. With the Bank of Ghana currently under a new leadership appointed by President John Dramani Mahama, some industry players and watchers are optimistic that the authorities will heed the calls for the restoration of some of these collapsed local banks.
Experts say the government and the Bank of Ghana must take a critical look at how to restore balance in the banking sector to ensure that Ghanaians retain a significant stake in their own economy.
