Professor John Gatsi, Dean of the University of Cape Coast (UCC) Business School, has called on Dr. Johnson Pandit Asiama, the newly appointed Governor of the Bank of Ghana (BoG), to prioritize compensating owners of banks that were shut down during the financial sector clean-up.
Speaking on the need to restore trust and fairness in Ghana’s banking sector, Prof. Gatsi emphasized that such compensation would address lingering grievances and reassure investors about the stability of the financial system.
“The affected bank owners are still traumatized by the actions of the BoG,” Prof. Gatsi stated. “To restore confidence in the banking sector, we must ensure that they are duly compensated.” He further proposed the establishment of a National Reconciliation Commission platform, where affected individuals could receive a formal apology for their losses, alongside financial redress.
The financial sector clean-up, which began in 2017, saw the revocation of licenses of several banks, savings and loans companies, and microfinance institutions due to insolvency and regulatory breaches. While the exercise aimed to strengthen the sector, critics like Prof. Gatsi argue that the process lacked fairness, particularly for banks that were making efforts to resolve their liquidity challenges.
Prof. Gatsi highlighted that a significant portion of Non-Performing Loans (NPLs) recorded by these banks stemmed from government agencies failing to pay their debts, which exacerbated the financial strain on these institutions. “Some banks had taken steps to address their challenges but were still forced to shut down,” he noted. “This has left a bitter taste and created distrust among investors.”
To rebuild confidence, Prof. Gatsi suggested that the BoG consider reinstating licenses for bank owners willing to resume operations, while providing full compensation to those who choose not to return to the sector. He also called for clear assurances from the central bank to prevent future abrupt closures, which he believes would discourage investment in banking, insurance, and microfinance companies.
Despite his criticisms, Prof. Gatsi commended Dr. Asiama for his commitment to restoring confidence in Ghana’s banking sector. He urged the new BoG Governor to take decisive steps to rectify past injustices and foster a more equitable and investor-friendly financial environment.
The call for compensation comes at a time when Ghana’s financial sector is still recovering from the aftermath of the clean-up. While the exercise aimed to create a more robust banking system, the human and economic costs have sparked debates about the need for reconciliation and redress. Prof. Gatsi’s proposal underscores the importance of balancing regulatory rigor with fairness, ensuring that the sector’s stability does not come at the expense of investor trust and economic inclusivity.
As Dr. Asiama settles into his new role, stakeholders will be watching closely to see how the BoG addresses these concerns and works to rebuild a financial sector that is both resilient and just.
