Dr Mahamudu Bawumia
Vice President Dr. Mahamudu Bawumia has justified the government’s massive banking sector clean-up which saw the merger of a number of the country’s commercial banks and the extinction of others.
He described the state of the sector prior to the clean-up as a scary situation because he said the industry was on the brink of collapse.
Speaking at the opening of the 11th quadrennial conference of the Industrial and Commercial Workers Union (ICU) in Accra on Thursday, Dr. Bawumia insisted that but for the bold and timely intervention of government, the entire banking sector would have collapsed and put the entire economy in crisis.
“The banks were about to collapse but we were probably days away. It was that scary when the governor presented the state of the banking system and how it was worsening. We had already started seeing in some micro finance and savings and loans companies. Some had shut down and some were not paying and were asking customers to go and come back and we were tethering on the brink of the collapse of the entire system because once you start a run on one bank, then the entire system goes,” he revealed.
The three-day conference was on the theme “The impact of COVID-19 pandemic on business and labour: The role of social partners.”
Dr. Bawumia described the financial sector reform of 2018 and 2019 as the second major landmark decision of President Akufo-Addo’s presidency.
He said the previous Mahama-led government recognised the problem but it took courage on the part of the Akufo-Addo government to tackle the problem head on.
“The question of course arises, was this too bitter a pill; did the Bank of Ghana go overboard?” he asked rhetorically, whilst noting with emphasis “but you had a situation where you had a cancer and it is on your toe and if you do not cut it, it will spread and we had to cut it off and make sure we took the decisions, and thankfully we have saved the banking system.”
Economic Endurance
But for the clean-up, he insisted most indigenous banks in the country would not have endured the shocks of the COVID-19 pandemic.
On the response of the government to the pandemic, the Vice-President said, government responded among other interventions through the coronavirus alleviation package through the increase of the COVID-19 testing facilities, equipping of several hospitals across the country and subsided electricity for 4.7million customers from April 2020 to March 2021, and disbursed GH¢412 million to Ghanaian businesses among other interventions from the Bank of Ghana.
These measures, he said, were beneficial to many SMEs and large enterprises, cushioning their production capacity and preventing layoffs.
He said even though the COVID-19 pandemic had bitten hard on the economy, data from Ghana Statistical Service (GSS) indicate that the country’s economy was gradually rebounding.
The outgoing General Secretary of the ICU, Ghana, Rev. Solomon Kotei, stressed the need for government to scrap overtime tax, which he observed was a disincentive for workers.
He said the financial sector clean-up was too harsh, as it triggered panic and harsh criticisms, stressing that closure of the borders also affected the importation of raw materials, particularly for the hospitality industry.
The Vice-Chancellor of the UPSA, Prof. Abednego Feehi Okoe Amartey, welcoming the delegates, was happy about the relative industrial peace in the country.
He called on institutions of higher learning to step up their contributions to national development and said the UPSA was on its part consciously training its students to be self-employed to reduce unemployment.
By Charles Takyi-Boadu