In his 4th State of the Nation Address (SONA) on Thursday [February 20, 2020], President Nana Addo Dankwa Akuffo-Addo said his government has made arrangements to pay all depositors of failed financial institutions, including DKM.
President Akufo-Addo announced that the government has made available an extra GH¢5 billion to pay affected depositors of failed financial institutions “a 100% of their deposits”.
The payments will be done once the process to validate all the claims are completed, President Akufo-Addo said.
In a surprise move, the President also said that depositors affected by the demise of DKM, a microfinance company whose failure was registered under the previous administration, will be paid in full after the validation of their claims.
Repairing an inherited poor financial sector
Facing an inherited, looming financial sector crisis upon taking office in 2017, the Akufo-Addo administration embarked on a financial sector clean up, which required an emergency decision to save depositors’ funds locked up in failed financial institutions.
In a recent interview, Minister for Finance, Ken Ofori-Atta, lamented over the poor state of the financial sector when the current came to office: “When we came in 2017, the asset quality reviews were clear, from the bank of Ghana as to where we are in the banking system. But the courage to make that decision [to clean up the sector] had not really be invoked and we went ahead to do it.”
The financial sector clean up exercise, according to President Nana Akufo-Addo, has so far cost his Government and the taxpayer close to GH¢12 Billion in an effort to protect depositors and investors.
This was before a December 2019 approval from Parliament to spend GH¢16.4 Billion to support the payment of all depositors of failed Specialised Deposit Taking Institutions and Micro Finance Institutions (MFIs) in full.
According to Government sources, significant deposits held by 2,655,100 depositors 91,525,550 bank depositors and 1,120,820 MFI depositors have been saved in the financial sector clean up process. Over 3,000 jobs have also been saved.
Unpacking the emergency effort made by his Government in 2017 to avert what was an imminent crisis in the financial sector following years of careless governance under the former administration, President Nana Akufo-Addo said his Government “will hold all those responsible for the failure of these institutions accountable”.
