BoG must move quickly to deal with non-bank sector – Ken Thompson

The Chief Executive Officer of Dalex Finance, Ken Thompson says the Bank of Ghana (BoG) must move quickly to deal with the non-bank sector to save Ghana’s economy from collapse.

Mr Thompson said the Bank of Ghana has done a good job in cleaning the banking sector adding that without a robust financial system the economy will collapse. 

Speaking at the JoyBusiness Financial Services Forum, Mr Thompson said, “…But seriously I think the Bank of Ghana has done some good works because Ebola broke out in our financial sector and the thing about Ebola is - you isolate and kill it or it kills you. There’s Ebola in the financial sector. 

“I can’t speak for banks; I can speak for the sector in which I’m in and I can speak for the economy of Ghana in general because Ghana’s economy is largely informal. The institutions that lend to this informal sector are the non-banks,” Mr Thompson said.

Panic withdrawals

He said “…people are concerned and I hope that the bank of Ghana moves quickly to deal with the non-bank sector… There is a concern and we can see huge withdrawals. People are withdrawing their money; most of them are withdrawing even before the maturity and I can understand the concerns. I mean we have Credit Unions that have put people’s life savings in institutions… and I can see the withdrawals. And we’ve got to remember that no financial institution is able to pay its depositors on demand, it’s not possible, normally you keep 10% reserve.”

He added this 10% is now being breached “…and if you don’t manage it, once it gets to the point where people cannot get their money back, they get more worried and the panic spreads and everybody is affected. Without a robust financial system, this economy will collapse.

But that 10% now is being breached and if you don’t manage it, once it gets to the point where people cannot get their money back they get more worried and the panic spreads and everybody is affected. Without a robust financial system, this economy will collapse.” 

He added, “I’m not too worried about the people that go to banks; I’m worried about the Wakye seller, I’m worried about the people that sell groundnut, I’m worried about the Koko seller because all those people borrow to business every day.”

Mr Thompson is, therefore, urging the Bank of Ghana to quickly move to the non-bank sector and deal with it decisively “…or else we are all in trouble.”