Govt used a vindictive strategy to clean up banking sector – Edudzi Tamaklo

Legal practitioner and spokesperson for the National Democratic Congress(NDC) Godwin Edudzi Tamaklo, has criticized the Akufo-Addo-led government for what he describes as the uneven and vindictive strategy employed in the banking sector clean up in the country.

He has therefore lampooned the move by government to borrow 170 million Euros from the European Investment Bank to establish an African Development Bank in Ghana, as part of his official visit to Belgium on Wednesday, May 19, 2021.

Mr Tamakloe said this in an interview with Berla Mundi on the New Day show on TV3, Thursday, May 20, 2021, when reacting on the heels of the meeting between President Nana Addo Dankwa Akufo-Addo and Mr Werner Hoyer, President of the European Investment Bank about the largest loan facility the bank has granted to establish a development bank or any project in Africa.

He said, “in fact, the irony of the situation is that, we are having to go for a loan of 170 million Euros to set up a development bank when the same government has expended GHC 21 billion, which is five times more of the amount we are borrowing in order to set up another bank, it does not make sense at all."

"And this again affirms the general belief of the level of cluelessness, the level of incompetence demonstrated by this administration. It has been suggested that when this government came in, the report on the banking sector, among other things, there was the need for a cleanup."

“Now the government of Ghana said the only way out of that clean up was to dissolve those banks by revoking their licenses. It begs a lot of logic that, you then dissolve about five universal banks and then say that you have expended GHC 21 billion in cleaning them up. But we have been told that the problem within the banking sector then was GHC 9 billion, all of us here, prudent as we are if we have a 9 billion problem, are we going to spend 21 billion to resolve a 9 billion problem? We are prudent, we will never do that if it’s our own money."

“But government of Ghana, knowing that this does not have any direct effect on them, decided to use 21 billion to solve a 9 billion problem. Now you turn around, having done this, to now say that we are going to borrow 170 million Euros, that is about GHC 1.9 billion when we have 21."

"Do you know that, as we speak the government of Ghana is imposing additional taxes on the banks to pay for their reckless decision? If we had kept these banks alive, we would have sustained the various jobs in those banks, those banks today will be giving more. And I will use a very small example, you know a particular bank I don’t want to mention names, they were giving so much money to contractors to do their construction business and other things then they will go back and pay."

"Government owed these contractors, so when government pays they also come and pay the banks, government did not pay the contractors so they defaulted, then you use that as a basis to revoke the bank’s license. And now you go and borrow GHC 1.9 billion in order to come and set up another bank."

Mr Tamakloe further said that “so it was a short-sighted, vindictive government policy of collapsing banks. Do you know that they never used an even strategy, there were banks that were in similar positions that were sustained? I am even using prudential(as an example), they had a similar insolvency problem but they were sustained through that, so I’m saying that but for vindictive politics, we will not be going out there to borrow 170 million Euros to come and set up a bank when we have wasted GHC 21 billion in the name of banking sector clean up, this is sheer wickedness. If this money or funds were Akufo-Addo’s personal money, he will not spend it the way he has done, it’s regrettable”.

On his part, Alfred Thompson, former Deputy Managing Director of the National Investment Bank(NIB) dismissed Mr Edudzi’s criticism, describing it as a mischievous assessment of an opposition view.

“My good brother is being mischievous here because he is trying to use the opposition view to dissuade Ghanaians to think that the government did a bad thing by doing the banking sector clean up. Where even in their own government they knew they had to do the banking sector clean-up, Dr. Alhaji Mahamadu Bawumia, then the Vice Presidential candidate told them several times that the money you are giving to some of these banks, revamping them, is not about revamping them but you need to clean up in order to build an economy."

"It’s like I have a foundation that is weak and I want to build upon, you have to break it off, fix it well and make sure that you build, that is why when we had all these COVID issues, the shocks in Ghana was less than the shocks in other countries because of the good system that had been put in place”.