The cost of Ghana’s financial sector cleanup risks escalating to 20 billion cedis ($3.5 billion) as the government weighs increasing the guaranteed payback for some depositors, Finance Minister Ken Ofori-Atta said. The West African nation has approved funding of about 16.4 billion cedis since 2017 to help recapitalize the industry and safeguard depositors’ funds after the central bank revoked the licenses of nine insolvent lenders and 23 second-tier institutions, Bloomberg News reported.
Ghanaian prosecutors charged the chief executive officers of two defunct lenders for alleged crimes that contributed to a banking crisis that cost the West African nation 12.5-billion cedis ($2.2 billion) in bailouts, Bloomberg News reported. Michael Nyinaku, the former CEO of Beige Bank Ltd., appeared in the Accra Circuit Court on Tuesday on counts of stealing 341 million cedis and money laundering, court documents showed.
Ghana has too much power and gas, and that’s a bad thing for government finances. With capacity that’s almost double the country’s peak demand needs, Ghana’s electricity utility has to pay independent producers about $450 million every year for energy that it doesn’t need or use, Bloomberg News reported. This adds to the sector’s liabilities, which are the biggest debt threat to a nation that seven months ago completed its 16th bailout program with the International Monetary Fund.
The regulatory cleanup of Ghana’s lower-tier lenders that resulted in 23 companies being declared insolvent and losing their licenses could risk as many as 4,000 direct jobs, according to an industry body, Bloomberg News reported. The central bank announced last week it had revoked the licenses of savings and loans companies as well as finance houses and appointed a receiver to manage their affairs.
A total of 23 Ghanaian financial institutions have their licenses revoked because of insolvency, a statement from Ghana's central bank reached to Xinhua on Saturday, Xinhuanet reported. The 23 institutions were within the savings and loans as well as the finance house categories of the financial sector. Even after a reasonable period within which the Bank of Ghana has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency, the statement said, the institutions had remained bankrupt.
The Bank of Ghana revoked the licenses of 347 insolvent micro-finance firms after the conclusion of a cleanup of the banking sector. It cancelled the permits of 192 firms currently in operation in addition to 155 that have ceased operations, the Accra-based regulator said in emailed statement, Bloomberg News reported. The regulator also annulled the licenses of 39 insolvent micro-credit companies, it said in a separate statement.
PBC Ltd., Ghana’s biggest cocoa buyer, seeks to raise $100 million from international banks to help pay off cedi debt that matured late December, Bloomberg News reported. The transaction, handled by an Accra-based advisory firm, should be completed before the start of the main harvest on Oct. 1, said Deputy Chief Executive Officer Kojo Safo. The company has approached the state-run pension fund and the government, who together own a 75 percent stake in PBC, to provide guarantees for the loans that are likely to have maturities of five to six years, he said.