A calm but disciplined gentleman with monetary economics and research at his fingertips, Dr. Ernest Addison's reappointment as the Governor of the Bank of Ghana to serve another term has come as no surprise to many economists, analysts, market watchers and industry players.

This is because of the enormous work he’s executed at the Central Bank to revolutionize Ghana's banking industry since assuming office in April 2017, which has consequently changed the face of the industry for more exciting times.

Coming at a time when the banking industry was going through difficult times [weak corporate governance structures, misuse of depositors' funds, excessive risk-taking, bad accounting practices, among others] which could have collapsed the entire financial system and thrown the economy into chaos, Dr. Addison’s difficult but necessary decisions has eventually paid off, bringing sanity and confidence to the banking system.

The financial sector clean-up was necessary to weed out those who had mismanaged some banks and other financial institutions, exhibited dishonesty and eroded confidence in the banking system. Critics of Dr. Addison perhaps forget that the 2007 financial crisis and the 1929 Great Depression of the USA started as a Stock Market Crash, but later resulted in total financial sector failures and such history serves as a warning signal to Ghana.

What baffles many is the calm and collective manner in which the Dr. Ernest Addison-led team undertook the financial sector cleanup. Today, the country is witnessing a stronger and robust financial sector.

Based on data from the banks, all aspects of financial statements, from balance sheets to cash flows and profitability statements, indicate that the banks have been churning out some extraordinary numbers, signifying the good works Dr. Addison did in the last three years, supported by the Deputy Governors and staff.

Importantly, the banking industry recorded outstanding profit before-tax of GH¢6.1 billion in 2020. All the financial soundness indicators [Liquidity, Capital Adequacy Ratio and Non-Preforming Loans] have been remarkable. For instance, the banking industry’s Capital Adequacy Ratio of 19.8% was well above the regulatory minimum threshold, whilst non-performing loans is still lower at 15.7% despite the impact of Covid-19 on households and businesses.

Dr. Addison’s adroitness and strong leadership also speaks significant volumes in other key monetary economic indicators such as interest rate, exchange rate, money supply, inflation, amongst others which have witnessed extraordinary performance. For example, the cedi has consistently performed better year-on-year, depreciating by only 3.9% in 2020. With only a month into the year, Ghana’s local currency has recorded 1.0% appreciation against the US dollar – good news to businesses, importers and consumers.

The policy rate has also gone down by more than 10% since he assumed office almost four years ago. This, as a result, culminated in lending rates falling by about 10% to the present 21.5% since 2017.  This is a feat worth celebrating as the cost of credit has eased significantly, stimulating household and business spending.

Taking a retrospect of the years 2005 to 2009, Dr. Addison, then Head of Research, played instrumental roles in the transformation of the Ghanaian banking sector with reforms such as the Credit Reporting Act, which paved ways for borrowers' credit history to be tracked, Borrowers and Lenders Act, the Foreign Exchange Act, 2006, (Act 723), which prohibits the pricing, advertising and receipt or payment for goods and services in foreign currency in Ghana, among others. He also played a lead role in the formation of the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS), which has led to a transformation in the payment systems in Ghana.

Achievements

The Governor of the Bank of Ghana, Dr. Ernest Addison, was named the Central Bank Governor of the Year for Sub-Saharan Africa in 2020. The Global Markets, a newspaper published digitally to cover the Virtual IMF/World Bank Annual Meeting 2020 gave Dr. Addison the award in recognition of his exceptional leadership.

A statement said the award was also in recognition of the Governor’s sterling performance in managing the coronavirus pandemic, which has seen the Bank of Ghana introduce a raft of measures aimed at supporting the government’s transformational agenda and ensuring the safety and soundness of Ghana’s financial sector.

“The Ghanaian central bank has drawn praise for its shrewd handling of the coronavirus crisis. The bank was able to accelerate its monetary policy loosening in order to support the economy,” the statement said.