ADVERTISEMENT

Ghana's banking sector in crisis - Dr Richmond Atuahene warns

Banking consultant Dr Richmond Atuahene has painted a gloomy picture of Ghana's banking sector, describing it as being in a state of crisis for the past decade.

Dr-Atuahene

His remarks come in the wake of Societe Generale's announcement of its exit from Ghana after twenty years of operation in the country.

In a recent interview on GHOne TV's State of Affairs, Dr. Atuahene pointed to alarming data on Ghana's banking sector, particularly concerning non-performing loans (NPLs), which have averaged around 16.5% over the past ten years. Citing literature from the International Monetary Fund (IMF), he argued that any banking sector with more than 10% non-performing assets could be considered to be in a fully-fledged crisis.

"If you use this to test the resilience of the sector, it is completely not resilient," Dr Atuahene asserted.

Dr Atuahene emphasized the severity of the situation, citing literature from the International Monetary Fund (IMF) to support his claims. "There is a literature written by IMF staff in 1998. It states that any banking sector that has more than 10% non-performing assets can be described as a fully-fledged banking distress or crisis," he explained.

ADVERTISEMENT

Highlighting the challenges faced by local banks, Dr. Atuahene dismissed the notion of them capitalizing on the exit of foreign competitors. "Indigenous banks both privately owned and state-run, lacked the stability and muscle to be bidding for the spoils," he asserted.

Moreover, Dr. Atuahene criticized the Ghana Amalgamated Trust (GAT) for exacerbating the financial burdens of surviving banks. "You will be shocked to learn that the amount of money given to them and the cost of that money, alone is killing the banks," he opined, referring to the high costs of servicing the transfers.

The departure of multinational brands from Ghana in recent years further underscores the country's economic challenges, according to Dr Atuahene. "When you are a multinational going to invest; you look at microeconomic stability which includes a fairly stable currency, lower inflation, fiscal deficit control, a manageable public sector debt, positive balance of trade, etc. All these indicators do not look very good," he observed.

The departure of multinational brands from Ghana in recent years further underscores the country's economic challenges, according to Dr. Atuahene. He cited unfavorable macroeconomic indicators and currency instability as deterrents to foreign investment, urging the government to address these issues urgently.

ADVERTISEMENT

While Societe Generale's exit from Ghana is part of a broader trend of European banks pulling out of African markets, industry analysts foresee Nigerian and South African banks emerging as dominant players on the continent.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.com.gh

ADVERTISEMENT