It was the chronicles of the Vice President, Dr Mahamudu Bawumia, then the economic pontiff par excellence of the opposition NPP, whose impeccable exposes on the economy via series of public lectures, that made it crystal clear that our financial sector was a ticking time bomb that needed immediate detonation. Apparently, the then government was either ignorant of the magnitude of degradation of Ghana’s financial system or simply happy to nurture rot and found it difficult to ward off the tag of incompetence. Such was the product of Dr Bawumia's “highly competent” presentation of the issues bedevilling our economy that made it impossible for even the then Vice President and former Governor of the Bank of Ghana to respond to what became known as the “50 unanswered questions”.

All of us who had the minutest appreciation of economics, financial principles and at least loved the petit of truth hailed Dr Bawumia and wished for his coming to salvage the clearly broken system.

Fast forward, in May 2018; after power finally changed hands, from the Jubilee House all the way down to gatekeepers of community toilets, car parks and markets across the country, the Minister of Finance clothed in his signature white polished cotton attire and armed with bible verses and intermittently quoting his father’s political prophesies; announced the grand scheme of the salvation of our economy from “end-stage cancer”. The miracle pill was a ¢9 billion financial package carved out of the consolidated fund of tax-payers to clean up the rot created by “smart, privileged and competent thieves” who either by will or sheer incompetence had managed to run down several indigenous banks and financial institutions. The objectives of the well-welcomed clean-up agenda were as follows:

1. To restore sanity into the financial sector by asking banks to raise their minimum capital reserves
2. Protect depositors fund much of which had been misused by rogue managers
3. Restore liquidity shortages of most of these banks so they can improve their lending capacity
4. Clean up the millions of cedis in Non-Performing Assets that were being restructured in an endless deceitful cycle and finally;
5. Make Ghanaian banks sub-regionally competitive so as to attract investor confidence.

Whiles these objectives seem to have been met at least from pronouncements of the Minister of Finance, the President and all their apologist; the unsolved lot of the exercise leaves much to be desired. It has been to the detriment of Fund Managers, who have become “victims” for the lack of a better word, of a 'banking-skewed’ exercise embarked upon by the Central bank.

The managers of the economy and the Bank of Ghana made us understand that the exercise, though very expensive, was needful. It was the only sure way of protecting the deposits of thousands of Ghanaians and businesses and rein in some sanity onto the financial space whilst preserving jobs.

A question that remains begging for answers to this day is how has this been achieved?

Could this be the only and best solution to the challenges purported to have existed? The Receiver appointed by the Bank of Ghana initially categorised institutional depositors and investors in the liquidated savings & loans and microfinance institutions into Social Services institutions and others.

The social services institutions were made of Rural Banks, Credit Unions, Churches, Schools and NGOs.

These social services institutions were treated as essential institutions and so were given 80% of their locked-up funds with the liquidated institutions that were placed under the receivership of Eric nana Nipah.

Unfortunately, other investors/depositors, including Fund Managers, were given only 20% of their deposit/investment in cash and the remaining 80% in a five-year bond. Ironically, over 90% of the investible funds of the so-called social services institutions are with Fund Managers. Very mind-boggling is how fund managers who controlled about 90% of the investible funds of the category set out as Social Services could not be catered for as a specialised block.

How would one expect these fund managers to meet the largely short-term maturing obligations with non-existent returns while the very cash to be paid to their clients are locked up?

Would it have been necessary for SEC to revoke licenses of these Fund Managers using hard-earned tax payer’s money if their locked-up funds had been given the needed attention and handled with dispatch?

Could this feed into conspiracy theories of political opponents that it was an exercise aimed at getting some market players off or painted rogue for the monopoly of a few in privileged positions?

Regrettably, all the same, it took the noises made by market actors to finally get attention for the 80% payment made to fund managers in bonds to be converted to cash at a time not much had been left of them after several months of failure to honour maturing obligations.

However, the initial payment to Fund Managers was just a minute fraction of the total claims of these firms. Moreover, most Fund Managers, including some state-owned fund managers, have still not received the full payment of their claims for varied reasons from the Receiver.

Outstanding payments to be made by the Receiver to fund managers are not for invalid claims but validated claims of some fund managers who remain unpaid for lack of funds to date.

Where then is the money the President intimated had released for the total payment of all depositors affected by the financial sector clean-up?

Again, the Receiver claims he is investigating some of the Fund Managers' investments, which has taken about two years now without any tangible word from him to the Fund managers.  

The other reason they give non-payment of claims made by the fund managers is that they do not have data on the liquidated institutions. So they are now looking for data before they can validate customers’ claims which has also taken about two years now.

I want us to look at the three reasons the receiver has given to these fund managers why their claims are still not being paid, even though the Governor of the Bank of Ghana wants Ghanaians to believe that over 95% of all claims have been paid.

First, we were all here before the 2020 election when the Receiver made a public statement that he has been given enough money to pay all depositors of the liquidated institutions. But, one may ask, where did the money go? Why are some Fund Managers whose claims he has validated still not received their full payment?

Second, the fund managers whose investment or claims are under further investigation, what is delaying the internal investigation of the Receiver and other public agencies that close to two years they have not finished the investigation and validate their claims for payment?

Lastly, with the institutions, the Receiver claims they don’t have data on customers; what does he want the fund managers and other customers of the defunct companies to do? Why is the Bank of Ghana not providing the data? What information did the Bank of Ghana gather on the institutions and their customers before their licenses were revoked? If the bank of Ghana cannot provide data on the customers for them to be paid, what is the value and integrity of the license it gives to financial institutions to operate in the country? Does it mean anyone can go to the Bank of Ghana to acquire a license to operate a financial institution and having mobilised customers’ deposits and investment, destroy the customers’ data, and that end it for the customers? How will Ghanaians have faith in the banks and other deposit-taking institutions licensed by the Bank of Ghana?

How could the Bank of Ghana and the Receiver give such an excuse as they don’t have data on the institutions they themselves revoked licenses and placed under government bailout and even given bail-out funds?

As a result of the difficulty fund managers have in getting the full payment of their claims with the bank of Ghana appointed Receiver, most fund managers, including some state-owned fund managers, currently are unable to honour redemption applications of their clients.

Bank of Ghana should know that the social services institutions she is trying to protect are really struggling with liquidity because most of them have their investments locked up with fund managers whose investments are currently not paid fully by the Receiver because of the indefensible reasons stated above. And to add insult to injury to the rural banks, the Bank of Ghana officials who go for inspections at the various banks requests that the banks write off the investments they have with fund managers in their books. Why? Is it because the central bank has decided not to pay the Fund managers so they can be liquid and be able to meet their redemption obligations to these Rural Banks? Are fund managers not part of the financial sector of Ghana?

Indeed bank of Ghana cannot deny the immense role Fund Managers play in the financial economy of Ghana. Fund managers are big players when it comes to purchasing government bonds and bills. In addition, they play the biggest role in mobilizing long term capital from investors to support government or corporate infrastructure projects in Ghana in terms of certificate discounting for contractors and sometimes pre-financing government and corporate projects.

Indeed the government can rely on Fund managers to raise the needed funds required to pre-finance housing projects and other long term self-financing capital projects the government wants to embark on.  Therefore, it will be expedient for the Bank of Ghana and, for that matter, the government of the day to address the non-payment of the claims of Fund Managers to safeguard the snowballing of the liquidity challenge of Fund Managers from eroding whatever gains they made in the clean-up exercise they embarked on.

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The writer is an investment analyst with over 10 years of experience in the investment sector and some experience in banking, specifically in Risk and Compliance Management, Agriculture Finance, and SME Banking sectors. He can be contacted via email at kwakkrich@yahoo.com.