Between 2016 and 2023, the Bank of Ghana (BoG) has accumulated nearly half a billion Ghana cedis in dormant accounts across the financial sector.

These accounts, containing funds in various currencies – GHS 167.8 million, $14.6 million, €2.3 million, and £2.4 million – represent a significant financial resource that, while idle, could be redirected to support national development.

These funds are currently held by banks for their benefit, but by introducing a regulation to transfer and invest these funds after a year of dormancy, Ghana could unlock a valuable resource to fund critical projects in infrastructure, healthcare, and social programs.

This proposal outlines a regulation for the compulsory and automatic investment of dormant funds after one year of dormancy. By channelling these funds toward productive use, Ghana stands to generate substantial public benefits rather than leaving them idle in bank vaults.

Dormancy and Transfer: A Simple Framework

The framework for managing these dormant funds would establish clear timelines and rules for dormancy and notification:

1. Dormancy Period: After a full year without any activity, an account would be classified as dormant.

2. Notification Period: Banks would notify account holders three months before an account reaches dormancy, giving them a chance to reactivate it.

3. Automatic Transfer to BoG: If inactive for a full year, funds would automatically transfer to a dedicated BoG account for investment.

4. Separate Investment Accounts by Currency: Funds from different currencies would be managed in segregated accounts to maintain transparency and optimize investment tracking.

A Strategic Investment Approach

Once transferred to the BoG, these dormant funds could be pooled into a strategically managed investment portfolio. With the BoG overseeing the investment strategy, the funds would be directed into secure and impactful national projects. Potential areas of investment could include:

1. Government Bonds: Dormant funds could go into low-risk, government-issued bonds, ensuring a reliable return without compromising the funds.

2. Infrastructure Development: Directing a portion of the funds to national projects – such as roads, schools, and healthcare facilities – would enhance public infrastructure and support long-term economic growth.

3. Social Programs: Part of the funds could be allocated to social initiatives, such as youth employment schemes, agricultural programs, and poverty alleviation efforts, creating meaningful benefits for society.

4. Capital Market Investments: For currency-denominated funds, BoG could consider low-risk capital market instruments to maximize returns in the long term.

Expected Outcomes: Benefits to Ghana

The redirection of dormant funds would yield multiple benefits for Ghana:

- Revenue for Public Programs: Dormant funds would become a new revenue stream, supporting essential public programs and reducing reliance on external borrowing.

- Economic Growth and Job Creation: Investment in infrastructure and social programs would stimulate job creation, economic activity, and overall development.

- Enhanced Transparency and Accountability: BoG would issue annual reports on the performance of these investments, fostering public trust through accountability.

Implementation Roadmap

The phased implementation of this regulation would make the transition seamless, minimize risks, and ensure effective use of funds:

Phase 1: Preparation (0-3 Months) 

   BoG would draft the regulatory framework and engage with financial institutions to finalize the necessary procedures.

Phase 2: Awareness and Notification (3-6 Months) 

   Banks would begin notifying account holders about potential dormancy and impending transfer if their accounts remain inactive.

Phase 3: Investment and Reporting (6-12 Months and Beyond) 

   BoG would commence investment of dormant funds and issue annual performance reports to the public, highlighting fund allocations and returns.

Addressing Legal and Risk Concerns

To mitigate potential legal and financial risks, BoG would ensure the regulatory framework aligns with Ghana’s financial laws and account holder rights. Additionally, a diversified investment strategy would safeguard the funds against economic fluctuations, while robust reporting mechanisms would build public confidence.

Conclusion

The Bank of Ghana has an unprecedented opportunity to transform dormant funds into a dynamic asset for national growth.

By implementing a regulation for the compulsory and automatic investment of these funds, Ghana can shift resources away from passive bank holdings into initiatives that benefit all citizens.

This approach would exemplify a commitment to forward-thinking policy and a desire to maximize every available resource for public good. In the face of Ghana’s pressing development needs, this proposal offers a responsible, impactful solution that has the potential to become a cornerstone of sustainable development and economic progress in the years to come.