Former Chief Justice Sophia Akuffo has criticised the financial sector cleanup carried out between 2017 and 2020, asserting that the economy’s managers failed to assess the consequences of their actions thoroughly.
In a recent interview with TV3’s Alfred Ocansey, Akuffo emphasised the need for a more considerate approach towards stakeholders affected by the banking sector reforms.
Akuffo argued that an effective manager should have anticipated the impacts of collapsing banks and financial institutions before proceeding with the cleanup. She suggested that the government and the Bank of Ghana (BoG) should have warned all stakeholders to avoid unexpected disruptions.
“An efficient manager evaluates all possible consequences before taking action,” Akuffo stated. “You must consider those affected and decide whether they deserve compensation.
Transparency is crucial; people should not wake up to find their lives changed without warning.”
She further criticised the government’s plan to compensate cleanup victims, questioning the proposed compensation’s adequacy. “Returning the same amount of money that was initially invested without considering its depreciated value is insufficient,” Akuffo remarked.
“At the time, that money held significant value. The compensation plan should reflect that.”
In response to the criticism, President Nana Addo Dankwa Akufo-Addo recently instructed the Finance Ministry to release GHC 1.5 billion to support victims of the cleanup exercise.
Finance Minister Dr Mohammed Amin Adam defended the government’s actions, emphasising its commitment to the welfare of Ghanaians despite the challenges of holding the government accountable for individual investment decisions.
Dr Adam explained that the government has been attentive to the needs of those affected, revealing that it has already provided bailouts and will release additional funds by October. He also noted that the government had completed debt restructuring with official creditors and Eurobond holders, totalling $18.2 billion.
The banking sector cleanup involved significant reforms to stabilise Ghana’s financial system, resulting in the collapse of nine indigenous banks and over 300 other financial institutions.
Some banks were consolidated or absorbed by more vital institutions, and the BoG raised the minimum capital requirement from GHC 102 million to GHC 400 million, prompting further mergers and adjustments within the sector.
