Following the downgrade of the three biggest banks in Ghana by international rating agencies, Moodys and Fitch, firebrand executive of the Tema East Constituency branch of the National Democratic Congress (NDC), Stephen Ashitey Adjei, is tracing the problem back to former President John Mahama.
In an interview with journalists in Tema on Tuesday, Mr. Ashitey Adjei, alias Moshake, said the development is just the after-effect of wrong policies implemented by the erstwhile Mahama government
“Fitch and Moody have downgraded the ratings of 3 leading banks in Ghana, namely, GCB, Ecobank, and UBA. This is an unfortunate development and does not inspire investor confidence.
“The development also casts a shadow of the bleak nature of the economic situation in Ghana and definitely a sequel of the ill-managed banking sector crisis from 2018.
“Hon Isaac Adongo has been vociferous on this matter but clearly, does not exude much credibility in the subject area for his refusal to talk about the root cause of the banking crises obviously because it will bite his hero, John Mahama administration badly,” Moshake said.
According to Moshake, “The GCB in 2009 was near insolvency and had to borrow as much as Ghc135 million each day to survive. This was on account of some over Ghc1.4 Billion debt owed them by the Tema Oil Refinery (TOR). The president then, H.E JEA Mills and Dr Kwabena Duffuor had a rescue plan which saved the situation. These leaders found money to pay the TOR Debt, and instituted stringent measures to enable TOR to pay back the money. In so doing, GCB was saved and did not have to borrow the daily over Ghc135 million it used to borrow for survival.
He added however that, “Between 2013 and 2016, the then Government under John Mahama decided to go on a reckless infrastructure voyage. In fact, they went on this tangent without making provisions to pay for these projects. They awarded huge contracts to contractors who had to borrow massively from banks for these projects. John Mahama’s administration even though had borrowed over Ghc87 billion between 2013 & 2017 could not pay these contractors for them to in turn pay these banks.
“Many of these banks who have loaned out huge loans to these government contractors and other enterprises who have performed some services for the Government began to experience capital adequacy challenges.
Coming to what he said was an asset review exercise that was done by the IMF at the time, Moshake said the same John Mahama Government had refused to pay for projects such as E-Blocks, Roads, and Markets and had invited the IMF and the World bank and commissioned them to conduct an Asset Quality Review(AQR) on these same banks whose clients Government had refused to pay.
“The AQR report revealed the insolvency of 9 banks clearly as a result of the non-payment of the contractors who had executed projects for the Government.
The report among other things recommended the recapitalization of these banks and it was thought that the Government was going to pay these contractors for them to also pay the banks.
Unfortunately, the John Mahama administration knowing that these banks had financial adequacy problems and were collapsing refused to pay the contractors to in turn save these banks. He went in for the 2016 elections knowing that all these 9 banks were collapsing. He lost the elections on 7th December and between 7th December and January 2017, he refused to pay the Government debt and left office with nonpayment of huge government liabilities and left office on 7th January, 2017.
This is the side of the banking crisis which Hon Adongo and his side have never brought up for Ghanaians to know that the banking crisis was engineered by John Mahama’s Government. “
According to him, With the inception of the new Nana Addo-led Government, and upon discovery of the ADR report, the overzealous government with new central bank governors whose knowledge in practical banking was zero decided to implement the AQR report of the IMF without discretion which destroyed the nation’s otherwise resilient banking industry left behind by President Kuffour and President Mills.
“So the simple matter here is that, John Mahama decided to build infrastructure indiscriminately and did refuse to pay for them even though he had borrowed Ghc 87 billion in 4 years. Contractors were given loans by innocent banks that had no idea that the John Mahama Government was going to refuse to pay for them, after having borrowed so much for reasons best known to himself, a new Government assumed office with no political will to pay for the projects either and went ahead to collapse these banks.”
Moshake questions rhetorically, “Every well-meaning Ghanaian has the right to question the intentions of John Mahama on why he caused such a huge mess and brought the banking sector on its knees as a result. Same is valid as to why Akufo Addo spent Ghc22 Billion on a problem that required only Ghc8 to GHc9 Billion to solve. Where did that huge money come from? And how was it used?”
According to him, the recent downgrading of the leading Ghanaian banks, namely, GCB, Ecobank and UBA only tells a story of a failing state which requires life support.
“This is a situation which was created solely by John Mahama’s Administration and must therefore be made to account for this national disgrace and tragedy.
Citizens must rise beyond partisanship, ask the right questions and demand accountability from our leaders,” Moshake said.