An Investment Banker and Chief Executive Officer of Eco-Capital Investment Limited, Mr Dela Agbo, says that the much touted return of confidence in the financial sector is yet to be attained. He reiterated that confidence in the financial sector is not yet restored as there are still uncertainties in the market.
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“From where I sit, I would say that the confidence is not fully back yet. There is an ample sense of certainty with investors but there is a time to go. Currently, if you approach clients and advise them for investment the feedback you’ll usually get is” oh not now, I want to understand what is going on before”, he said in a recent interview with the Ghana Talks Business.
This claim is contrary to what some financial experts have said with regards to the full restoration of confidence in the financial market following the reform as carried out by the Central Bank and the Securities and Exchange Commission (SEC).
For instance, an economic lecturer at the University of Ghana, Dr Ebo Turkson, during a recent analysis of the economy on ‘News File’, a popular current affairs show in the country, stated that the banking sector had begun recording some positive growth from last year.
However, nominal growth in figures does not automatically imply restoration of confidence in the financial sector. It may perhaps be a re-direction of deposits which hitherto would have to the institutions that are currently shut down. Businesses and individuals require necessary financial services such as payments, transfers, etc. They will solicit such services from institutions that are available irrespective of sentiments.
Hence sentiments can be negative, but to an extent, there may be growth in certain aspects of financial services.
Financial sector cleanup
In January, 2017, the BoG took the bold initiative to reform its ailing banking sector.
Consequently, it announced a recapitalisation programme with a requirement of GH¢230 million for banks, but the figure was further increased to GH¢400 million.
This resulted in the revocation of licenses of some local banks. The banks have since gone under receivership.
The entire process ended in 2019.
Following the successful implementation of the reforms the Governor of the central bank, Dr Ernest Addison, assured players in the sector that the exercise was over.
Even the finance Minister, Mr Ken Ofori-Atta, had also recently reaffirmed the BoG’s assertion.
Mr Dela Agbo however thinks the BOG would and should still continue with what they started as the reform may be far from over. Some aspects like re-capitalisation and improved governance structure have been implemented. You can, for example, see the BOG engaging more with the public. The aforementioned activities alongside improved supervision and full payment of customers’ locked up deposits would go a long way to restore public confidence.
Mr. Agbo added that the public understands that there may still be a situation where BoG has to deal with a financial institution that is faltering. “It’s obvious that some of the banks that say they are in good standing now, are still not liquid and are not paying peoples’ funds to them. This can still create uncertainties where the public could think that a clean up can happen again because a certain bank is not able to pay their depositors’, he said. To the public, the exercise may not be fully over, hence the lingering uncertainties.
“For an investment banker, it’s not easy in recent times to do placements with some banks even though they claim to be in good standing with the BOG’
Mr. Dela Agbo further added that the doubts that seemed to have characterised the sector was affecting the investment business. Investors are seen pushing back a little bit. However there is the hope that public confidence would be restored if regulators and receivers continue with what they are doing, that is paying depositors locked up cash and embarking on a lot more public education and engagements.