President Nana Akufo-Addo has said before he assumed power on January 7 2017, finance houses in the country were running what can only be called “glorified Ponzi schemes”, and had lured many depositors into these schemes.
He said the state of the banking and financial sector was, therefore, the most difficult problem his government met when it came into office.
According to Mr Akufo-Addo, many of the banks were in distress and the supervisory agencies were not performing their duties.
Nana Akufo-Addo who said this in his last State of the Nation Address in Parliament on Tuesday, 5 May 2020, noted, however, that his government intervened and has restored sanity to the sector.
“Probably, the most difficult problem the government met on coming into office was the state of the banking and financial sector. Many of our banks were in distress and had been kept on unsustainable and artificial life support by the Central Bank. The supervisory agencies were, unfortunately, not performing their duties, and the governance and management structures of many the banks were clearly not adequate,” the President said.
He continued: “If truth be told, many of the finance houses were running what can only be called glorified Ponzi schemes, and had lured many depositors into these schemes. We were in a desperate situation, and urgent, radical measures had to be taken to prevent the collapse of the entire financial and banking sector.”
To this end, the Bank of Ghana, Nana Akufo-Addo stated under new leadership, intervened, and has restored sanity to the sector, and, in the process, “we have saved the banks involved and 4.6 million depositors’ funds.”
“The government has had to find some GHS21 billion to fund the cleaning up exercise. This exercise has enabled a more robust financial and banking services sector to emerge, the better to finance the rapid development of our nation,” he added.
Nana Akufo-Addo entreated Ghanaians to learn lessons from the Ponzi schemes that have gotten their investments locked up while committing to pay all validated claims.
“There is no question but that many people got attracted to the unsustainable high-interest rates that some of these financial houses were offering. In all financial dealings, we have to accept what the experts tell us that, whenever whatever on offer sounds too good to be true, it invariably ends up being untrue and unsustainable. Government is committed to paying all validated claims, and I expect the process to be completed soon after the courts grant the liquidation orders for the remaining failed fund management companies,” Nana Akufo-Addo said.