Total deposits in the banking sector increased by 20% in spite of the lowered confidence in the sector. According to the Bank of Ghana’s (BOG) Economic and Financial Data released in March 2019, deposits increased from Ghs 59.9 billion in February 2018 to Ghs71.9 billion in February 2019 .
Confidence in the banking and the entire financial industry suffered a dip in the wake of the collapse of the non-solvent and ill-governed banks, as identified by the central bank. Confidence index measured 105.9 in February 2018 as against 98.6 in February 2019. Though depositors have not necessarily lost their deposits in these seven collapsed banks, they had to deal with acute uncertainties and delays in payment of deposits.
News coming from the woods on governance and the behaviours and actions of high-profile persons in leadership of those banks have gendered negative sentiments. Additionally, there have been actual locked up deposits in licensed non-bank financial institutions and insurance companies, while Menzgold and other schemes have flatly robbed investors of their assets. It is estimated that nearly 120,000 Ghanaians lost money to such schemes.
It may be noted that over a period of about five (5) years, depositors have lost monies to over 80 microfinance institutions across the country. The dip in confidence have however not just occurred only in 2018 but only climaxed from half a decade’s gradual and cumulative erosion of confidence due to these occurrences. Investors and depositors alike believe that the government and BOG could have done better, for example the DKM case, in preventing such from happening and also the handling of the situation when it broke out. Indeed the BOG has not been spared vilification in the perceived role of negligence and apathy.
Analysts view the current trend of increasing bank deposits as very positive for the banking sector and even the overall economy, as the financial sector drives the economy. Ghanatalksbusiness .com analysts believe that a significant level of discomfort still exist in the market and could extend as long as to the end of the year. Much more is expected from the regulator and the industry players in restoring full confidence in the banking population. The banking population would expect prompt services to boost their confidence while the regulator embarks on more education and PR activities to bring up full confidence. The banking industry has more to gain in attracting cheaper deposits which will improve overall sustainability and profitability of the sector.
