Vice President Dr Mahamudu Bawumia on Wednesday criticised former President John Dramani Mahama for failing to show leadership to resolve the financial meltdown in the country during his tenure of office.
He noted that the former President rather kept the banks and other financial houses in their comatose state till they died, instead of allowing the Regulator (Bank of Ghana) to perform its work independently as required by the law.
“This problem in the banking system was obvious in 2014 and even before. It is a problem that President Mahama and his government should have already thought about.
“Even when we were in opposition, we pointed out the basis of an available data that, at least eight banks are likely to collapse, and yet nothing was done and so when things came to a head in 2017, the Bank of Ghana took a decisive step to resolve a situation,”Dr Bawumia explained.
Vice President Bawumia said this when he reacted to a statement issued by former President Mahama on August 22, that he would set up a Policy Working Group with a view of coming up with a pragmatic solution to the financial crisis.
The Vice President made the remarks when he launched 100,000 housing project being implemented by the United Nations Office of Project Services (UNOPS) and the Sustainable Housing Solutions Limited at Afiaman in the Ga West Municipality on Wednesday.
Dr Bawumia explained that if anything has shaken the very foundations of confidence and trust in the financial system, then it was former President Mahama’s government that failed to exercise leadership to resolve the financial crisis during his tenure of office.
He said President Mahama’s administration did not roll out any specific policies to rescue those banks and financial houses that were in financial meltdown, saying that, the former President was now talking about supporting financial institutions because he wanted votes in the 2020 elections.
He noted that former President Mahama superintended over four years of power crisis (dumsor), while many teachers and nurses were unemployed and cancelled nursing and teacher trainee allowances and returned the nation to “Cash and Carry” system under the National Health Insurance Scheme.
Vice President Bawumia explained that President Akufo-Addo Government’s action to undertake financial clean-up had restored confidence in the banking system as customers of defunct deposit-taking institutions continue to access their funds without difficulty.
“Through government’s interventions, deposits held up by 4.6 million depositors had been saved, and also saved 3,000 jobs if the banks were allowed to collapse,” he stated.
He said should the 4.6 million depositors’ funds have been lost; it could have created a national security threat, which would have threatened the peace and stability of the nation, saying; “It is better to have a few well-capitalised, liquid and sound banks than having many under-capitalised and illiquid banks that could not effectively function as banks”.
Vice President Bawumia lauded the current leadership of the Bank of Ghana for showing courage by taking the bull by the horns and dealing decisively with the problems created by the erstwhile NDC administration led by President Mahama to avert the total collapse of the country’s financial system.
Ghana government spent GH¢13 billion to pay off depositors funds which were misappropriated by the defunct banks and savings and loans schemes.
Government set up the Consolidated Bank Limited and capitalise it with GH¢450 million to acquire depositors liabilities of the seven of the nine defunct banks so that no depositor loses his/her deposit.
Dr Bawumia said the move had resulted in stronger indigenous banking sector, restored confidence and trust in the financial sector, adding that, without a sound financial and banking environment, it would be difficult for workers to buy affordable homes with mortgage term.
He said that the NPP administration under President John Agyekum Kufuor instituted reforms between 2001 and 2008, to create a modern financial sector that was well-capitalised and liquid, which saw banks chasing workers to go for loans.
However those gains were painfully eroded by years of unregulated and supervisory oversight under the Mahama’s administration.
That, he said, resulted in financial institutions with inadequate capital and poor governance practices having a field day, while shareholders plunged the funds of depositors in risky ventures.