The Big Bank Heist? Unmasking the Truth Behind Ghana’s Financial Sector Purge
- Ghana’s Banking Sector Clean-Up: Reform or Economic Devastation?
In 2017, Ghana’s banking industry underwent one of the most aggressive financial sector reforms in the country’s history. Marketed as a “clean-up” designed to restore confidence in the financial sector, the Bank of Ghana (BoG), under Governor Dr. Ernest Addison, revoked the licenses of nine banks and hundreds of microfinance institutions, triggering a wave of job losses, economic hardship, and legal controversies. But was this intervention truly a stabilizing force, or did it dismantle businesses with reckless impunity?
A Necessary Reform or an Economic Misstep?
The official justification for the BoG’s actions was straightforward: too many banks were undercapitalized, mismanaged, and incapable of meeting their obligations. By revoking licenses and consolidating financial institutions, regulators aimed to strengthen the banking sector’s resilience.
However, critics argue that this intervention caused more harm than good. One such voice is Dr. Richmond Atuahene, a banking consultant and governance expert, who describes the clean-up as “the worst economic decision this country has ever experienced.” According to him, the approach taken by the BoG ignored due process, led to unnecessary business collapses, and aggravated the country’s financial struggles.
“In one case, if you owe me and I owe another person, shouldn’t you allow me to be paid so I can settle my obligations? Instead, the government failed to pay debts owed to banks and contractors, then turned around to demand their compliance with new capitalization requirements. That was a recipe for disaster,” he told NorvanReports in an interview.
The financial sector intervention was expected to cost somewhere around GHS 9 billion, but different reports from the IMF, BoG, MOF and former President Akufo-Addo put the actual cost between GHS 15.7 billion, GHS 18.9 billion and GHS 21 billion, raising questions about transparency.
The Collapse of Banks and Formation of CBG
Among the most controversial actions some say was taken was the formation of Consolidated Bank Ghana (CBG) in 2018. The government forced the merger of five collapsed banks—Beige Bank, Construction Bank, Royal Bank, UniBank, and Sovereign Bank—into CBG, injecting GHS 450 million in capital and issuing GHS 7.6 billion in bonds to absorb liabilities. While this prevented a total systemic collapse, it left many questioning whether these banks could have been saved through other means.
Dr. Atuahene argues that a more measured approach, such as gradual recapitalization and structured debt settlement, could have prevented widespread economic distress.
“The government owed GHS 35 billion to banks and contractors at the time, yet it forced them into liquidation without settling these debts. I personally know a contractor who secured GHS 5 million to complete a road in the Volta Region in 2020, but he has never been paid. How do you expect the financial system to function under such conditions?” he lamented.
IMF’s Position: Did Ghana Overreach?
An even more shocking revelation is that the IMF never recommended bank closures he disclosed to NorvanReports. Contrary to the widespread belief that the clean-up was an IMF condition, Dr. Atuahene stated that the IMF only advised Ghana to address the non-performing loan (NPL) crisis but never suggested mass liquidations as was stated by the former governor of the central bank.
In this special interview by NorvanReports, which looks to continue to investigate the long-term impacts of the banking sector clean-up and follow up on any legal or parliamentary actions taken, Dr Atuahene said by the time Addison took office, Ghana’s NPL ratio stood at 17.3%, but today, it has risen to 24.6%, according to the World Bank. Worse still, Dr. Atuahene alleges that BoG manipulated figures before Addison left office, presenting an NPL of 21%, despite unpaid government debts in the banking system. If true, this suggests that rather than solving the problem, the clean-up might have compounded it.
A Flawed Legal Process?
Beyond financial miscalculations, Dr. Atuahene raises a fundamental legal concern: Was due process followed?
Citing Section 16(3) & (4) of the Banks and Specialised Deposit-Taking Institutions Act, he insists that the BoG violated the law by failing to provide written notice and granting banks 30 days to respond before revoking their licenses.
“The law is clear: BoG must inform a bank, provide reasons, and allow it time to respond before any action is taken. Addison ignored this. He acted outside the law, treating bank owners and shareholders unfairly. That is criminal,” he stated bluntly.
This has led to mounting calls for a parliamentary inquiry or judicial review into whether affected banks were unlawfully stripped of their licenses. Some affected parties are still in court and are seeking damages and possible reinstatement.
Contradictory Numbers and Lack of Transparency
Perhaps the most unsettling aspect of the clean-up is the inconsistencies in financial data provided by the BoG, the Presidency, the Ministry of Finance, and international institutions.
- BoG claims GHS 15.7 billion was spent.
- Akufo-Addo stated in his State of the Nation Address that it was GHS 21 billion.
- IMF and the Finance Ministry cited GHS 18.9 billion.
With no official clarification, these discrepancies fuel speculation that the clean-up may have been financially and politically manipulated.
The Future of Ghana’s Financial Sector: What Next?
Years after the clean-up, Ghana’s banking sector is still struggling.
- Liquidity challenges persist as banks remain cautious in lending due to high NPLs and government debts.
- Confidence among investors and depositors remains shaky, especially following recent economic downturns.
- Calls for regulatory reform are growing, with demands for greater transparency in BoG’s oversight.
Dr. Atuahene and other critics suggest that a new committee should be formed to review the impact of the clean-up and potentially reinstate some affected banks if evidence shows unjust treatment.
More importantly, he believes BoG officials, including Dr. Addison, should be held accountable for violating due process and mismanaging the financial sector.
Conclusion: Reform or Reckless Economic Sabotage?
The Banking Sector Clean-Up was initially perceived as a bold move to sanitize Ghana’s financial system. However, as more evidence and expert opinions emerge, it appears the intervention may have been a misguided economic assault that destroyed more businesses than it saved.
As Ghana continues to navigate its post-clean-up financial landscape, one pressing question remains: Was this a true reform, or was it a reckless act of economic sabotage? For many affected stakeholders, only time—and possibly legal action—will tell.
This banking sector mess cannot be justified, in any proper jurisdiction, the BoG Officials,Former Finance Minister will be held accountable for a clean-up that has cost the country billions more than what was owed the banks. The interesting part is, it would have cost far less to do a gradual recapitalization and structured debt settlement, especially when the government held most of the banks liabilities (loans for contractors).
The officials who orchestrated the banking and financial sector scam which was labeled as “reforms” and turn out to hurt Ghana’s Economy must be re-investigated by the new government. Any culprits found must be held accountable or brought to book for any legal infractions. Never again in “AmaGhana abebr3”Long live democracy in Ghana
The banking industry was in serious crisis between 2015 and 2016
The banking industry could have collapsed completely as the problems with the non performing could easily have spread to all the other banks if the government and the Bank of Ghana had not taken decisive actions. in 2017
The estimated 24 billion spent was used to pay Ghanaians whose deposits had been misused by the banks.
We should thank the government of the day for giving such a relief to ordinary Ghanians , otherwise these depositors would have list their monies.
I wish people would have time to read the audit reports by KPMG and the other accounting firms on these banks before making comments on this issue.
My only regret is that the Directors of hese banks and their Supervisors at the Bank of Ghana had not been prosecuted .
foolishness. you read that govt owed banks and contractors 34b cedis and refused to pay at that time. is lending to govt and funding govt contracts what you term misuse?
if you read this piece you should know npl has now gone up by 4 percentage points. is it that now the npl cannot spread to all banks despite being worst now?
perhaps we need another cleanup
The Banking Crisis in 2015 to 2016 was a very serious threat to the banking industry and the financial sector. Nobody should downplay the looming danger at that time. The whole banking industry could have collapsed.
The Bank Of Ghana and the government in 2017 had to take hard and decisive actions to save the situation.
We should be commending the government at that time fir the bold and decisive actions taken
to save the banking sector rather than attacking them.
The Auditors reports on these banks showed gross mismanagement of depositors funds and insufficient minimum capital among others.. In.
the banking sector, when a bank ‘ catches cold’ and is not isolated, the cold spreads and destroys even the well managed banks.
The 21 billion cedis spent was monies paid to depositors.These are ordinary Ghanaians who had their monies at the banks and could have lost them if the government had not intervened to pay them..
In the nineties when BHC and Coperative banks collapsed, depositors lost their monies.. In this case, government decided to bail out depositors
My only disappointment is our failure to punish the Directors of these banks and the Supervisors of these banks at the Bank of Ghana
Your point is well noted, however, the inconsistencies in the figures need to be explained and the procedural issues raised cannot be overlooked. I want to believe some people benefited financially from the financial sector clean up due to the lack of transparency of the processes. Also, the government owed some of the contractors who and the contractors owe the banks. The government has not paid those contractors. So how do we praise the government from that perspective?