Locked-up funds in financial sector clean-up: Investors lace boots for massive protest tomorrow
A group calling itself, Locked-up Investment Holders Forum (LIHF), has served notice of its intention to hit the streets in protest against the refusal of the Bank of Ghana (BoG) to pay its members their locked-up investments in some of the financial institutions which were collapsed during the sector’s clean-up.
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The public protests, scheduled for Wednesday, March 27, will be held every fortnight according to the convener of the group, Dr Adu Anane Antwi, to express the displeasure of members after several years of waiting in vain for the release of their locked-up funds.
“We will always march to the BoG to meet the Governor and demand that he takes immediate steps to work on the proposals we have submitted to the BoG. We will also march to the Ministry of Finance to meet the Minister and demand that he advises and ensures that BoG takes immediate steps to work on the proposals,” he added.
Financial sector clean-up
In 2017, the government embarked on a major banking sector clean-up which resulted in a reduction in the number of commercial banks from 34 to 23. Under the same exercise, the first in the country’s history, a total of 347 microfinance institutions, 15 savings and loans and eight finance houses had their licences revoked.
A number of the institutions that had their licences revoked were found to have varying degrees of corporate governance lapses.
The government in 2020 disclosed that it spent about GH¢21 billion on the banking sector clean-up exercise.
Of the amount, a total amount of GH¢13.6 billion (3.5 per cent of Gross Domestic Product), according to the government, had been spent on the resolution of failed banks, Specialised Deposit-taking Institutions (SDIs), Micro Finance Institutions (MFIs), the establishment of the Consolidated Bank Ghana Limited (CBG), as well as the capitalisation of the Ghana Amalgamated Trust (GAT)", as at the end of first quarter 2020,
Additionally, an amount of GH¢5 billion was spent on the President’s directives to fully pay all depositors whose funds were locked up with the failed SDIs and MFIs.
Reasons for protest
Giving further details of the planned protests, Dr Anane-Antwi said the group submitted a proposal to BoG captioned, "Proposals to Resolve the Current Challenges Facing Distressed Finance Houses and Savings & Loans Companies to Pay their depositors" for the bank's consideration.
The proposed approach, he said, was based on the group’s belief that either the provision of liquidity support to the distressed Finance Houses and Savings & Loans Companies (FHSLs) and restructuring them, or revoking the licences of the distressed FHSLs and paying investors their deposits would be adopted for the resolution of the challenges of the distressed FHSLS.
However, after three months of the submission of the proposal, the BOG had not acknowledged receipt of the proposal or commenced action on it, a development which forced the group to issue a reminder letter on February 16, 2024, which had also not been acknowledged.
“We have come to realise sadly that BoG is not showing any concern about what is happening to investors in the distressed FHSLs. We note with regret that BoG has neglected its regulatory responsibilities owed to investors in these affected FHSLS, allowing us to suffer undue financial hardships, with some of our members, especially pensioners and the sick ones, dying as a result of not having access to their investments to take care of their health needs.
“We are gradually losing confidence in the BoG as an institution capable of regulating the FHSLs sector of the financial market and protecting investors in the sector. The behaviour of BoG suggests to us that it does not realise that we cannot have a financial market in the country if there are no investors in the country,” Dr Anane-Antwi said.
