JM has no alternative to banking sector cleanup – Bawumia

The Vice President, Dr. Mahamudu Bawumia says former President John Dramani Mahama and the NDC do not have any better alternative to the government’s banking sector clean-up.

Dr. Bawumia contends that the National Democratic Congress failed to put measures in place to ensure that financial houses comply with regulations in the financial industry hence the banking crisis.

Bawumia made the remark on the back of assertions by Mahama who described the banking crisis as a national security threat.

John Mahama during his interaction with some Ghanaians on social media criticized the state’s handling of the financial sector’s clean-up that resulted in the closure of 420 financial institutions in the last two years.

He said closing the financial institutions would have been the last resort by an NDC government.

Mahama added that he will soon set up a committee to advise him on the next move.

But Dr. Bawumia insisted that the banking sector troubles cannot be described as a national security threat.

“When we were in opposition we pointed out that at least eight banks were likely to collapse yet nothing was done about it. So when matters came to a head in 2017, the Bank of Ghana took a decisive step to resolve the situation. But today the response of former President Mahama is that he is going to set up a committee to tell him what to do. You have been looking at this problem since 2014; it is 2019 now.”

“When you are in leadership you take decisions when it is time to take decisions. This is just the same approach he has adopted for the free SHS and this does not demonstrate leadership. When you are faced with real crisis you take firm decisions, you don’t dilly-dally and play to the gallery. If the Bank of Ghana had waited for the banking system to collapse, it would have been a national security issue. In fact, saving depositors deposits has enhanced our national security,” he added.

The Vice President was speaking at a ceremony to launch a 100,000 housing project at Amasaman in the Greater Accra region.

“Has the former President not taken the trouble to learn from the experiences of countries all over the world in financial crisis management? Obviously not! Hence his admission that he has to set up a policy working group on finance and economy that is now studying and analyzing the situation with a view to coming up with pragmatic steps.”

“The former President and his NDC really have nothing useful to offer the Ghanaian people in this regard. The former President will like Ghanaians to believe that he knows how to stabilize the banking sector but he kept banks in their comatose state until they died instead of allowing the regulator to do its work independently as required by the law to administer the prompt interventions that were needed to ensure that the banks recovered. The Bank of Ghana under the current leadership has shown courage by taking the bull by the horn and dealing decisively with the problems created under the government of John Mahama to avert the collapse of the entire system.”

As part of the BoG’s clean-up of the financial space, it revoked the licences of nine universal banks, 347 microfinance companies of which 155 had already ceased operations, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.

Mr. Mahama, among other things, described the crackdown in the financial sector as a “national security threat.”

“The crisis has created major problems in the banking sector and financial sector including deepening the already widely held mistrust and lack of confidence in the system by Ghanaians. It appears to have no end in sight. It has also dealt a significant blow to the indigenous banks because such institutions have no external support to count on.

“While this development appears to be a threat to only the businesses that have been shut down, it is in fact a threat to our national security. The development in the banking and finance system and the matters arising call for grave concern on all who have been affected by this financial sector turmoil especially because it is an issue that threatens the country’s security.”