Sanitising the financial sector - Customers and regulators must act

BY: Doreen Hammond
The author, Doreen Hammond
The author, Doreen Hammond

In the last few months, the financial sector in Ghana has experienced what can  be described as a tsunami.

Some banks have collapsed,while some microfinance and savings and loans companies have also folded up.

Other banks have also been consolidated into one bank in the government’s bid to forestall their total collapse.

In many cases, customers have been the hardest hit of such unfortunate developments.

They are unable to access their deposits and the repercussions can be anybody’s guess.

This has led to long queues at the affected financial institutions coupled with agitations for legitimate demands for monies which seem to have vanished into thin air.

For employees of such institutions, the sudden loss of employment is the obvious effect.

This is also bound to have a ripple effect on their lives and that of their families.

They have added to the large number of unemployed and that is where the whole society is affected.

This situation has resulted in a loss of confidence in the financial sector, leading to panic withdrawals that may have more catastrophic endings for the banking sector.

It is even more unfortunate, considering that ours is not a highly banked society and it has taken a lot of effort to bring us this far.

To go back to ground zero is something we must avoid.


Such financial crises have not been new. Way back, almost 18 years ago, there was a much bigger scam in the “banking sector”.

A certain company called Pyram emerged out of the blue and started collecting deposits from customers with promises of huge and unbelievable interest rates.

It thrived for quite some time and got a large customer base as both the educated and uneducated were attracted by verbal recommendations of the interests that had been paid to other customers.

But that was exactly the catch; after the company had accrued huge amounts, the operators together with the deposits of customers were nowhere to be found.  
That was not to be the end, there have emerged more of such scams, fraud or whatever we will choose to call them,  including those involving R5 and DKM Microfinance.

Through the years, it seems we have not learnt lessons from these unfortunate happenings in the sector.

Customers don’t seem to be doing any research on the profile of the institutions where  they deposit their monies to establish how credible they are.

Their interest only seems to be the high interest rates promised.

If something sounds too good to be true, often times that is exactly what it is.

The critical question is : are we a greedy bunch of  gullible people who will just fall prey to anything once the offer of higher returns is dangled before us?

Government’s role

Often times when customers get swindled, we hear of appeals being made to the government for assistance to retrieve their monies.

In as much as the government has oversight responsibility over regulators and security agencies, this may hold.

For instance,the government will have to ensure that the regulator is up to his task and offending financial operators are brought to book.

As to it paying back the lost deposits, I shudder to think how this can be done.

Are we suggesting that  the government should use the taxes of those who stayed out to offset such payments or what?

A word to regulators

As we advice the cat , we should also advice the salted fish; therefore it is equally important to look at our financial regulators.

The current unfortunate situation calls for action.

There should be a way of  weeding the chaff out of the wheat before they cause this kind of damage and not after!  Our regulators should be proactive.

The law must deal harshly with those who take people’s monies under all kinds of pretext and refuse to deliver on their promise.

Additionally,  public education should be the way to go.

The financial sector is the backbone of our economy and all efforts should be made to ensure that it is on a sound footing at all times.

Anything short of this and we are in deep trouble.

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