The Member of Parliament (MP) for Sagnarigu, Atta Issah, has expressed his opinions on why some the current government under the leadership of President John Mahama must give fresh licenses to the banks that were collapsed under the previous administration.
The Legislator and Financial Analyst argues that the move will carry “significant policy implications that will impact economic growth, employment, and the capital market.”
He explains in the article below;
Why President Mahama’s Government Must Re-License Local Banks that were Collapsed During President Akufo-Addo’s Tenure
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I wish the NDC government could take decisive steps in restoring banking stability by issuing new licenses to banks that were collapsed under the previous administration. This move carries significant policy implications that will impact economic growth, employment, and the capital market.
1.Economic Growth & Development
Reissuing banking licenses will be a strategic step toward strengthening Ghana’s financial sector. The benefits include:
– Restoration of investor confidence by signaling a stable and inclusive financial environment, encouraging both domestic and foreign investment.
– Enhancing financial inclusion, particularly for SMEs and rural communities, enabling access to credit and fostering local development.
– Stimulating the private sector through increased competition, leading to lower borrowing costs and greater productivity.
– Reviving financial intermediation, ensuring savings are efficiently directed into productive investments across key sectors such as agriculture, manufacturing, and small businesses.
– Empowering indigenous banking institutions by supporting locally owned banks, reducing dependence on foreign entities, and improving economic sovereignty.
However, this process must be carefully managed to prevent risks such as:
– Moral hazard, where re-licensing is seen as a political rather than merit-based move.
– Inflationary pressures, which could arise if credit expansion is not accompanied by robust regulatory oversight.
2. Employment Impact
Restoring collapsed banks will directly and indirectly boost employment by:
– Creating jobs for former bank employees and stimulating banking-related sectors.
– Utilizing skilled professionals, preventing brain drain, and ensuring experienced hands contribute to economic recovery.
Challenges may arise, particularly in short-term financial strain, where government guarantees or recapitalization might divert resources from other critical sectors.
3. Strengthening the Capital Market
A thriving banking sector is essential for an efficient capital market. The benefits include:
– Improved market liquidity, enhancing trading activity and supporting capital formation.
4. Boosting investor sentiment, as fair and transparent restoration processes, will attract local and foreign investments.
However, to prevent market uncertainty, the restoration process must be transparent and structured to ensure long-term stability.
~Policy Recommendations
To ensure transparency, accountability, and economic sustainability, I recommend:
– Establishing an independent banking tribunal to objectively assess the viability of collapsed banks.
– Linking re-licensing to strict capitalization and regulatory standards to prevent financial instability.
– Strengthening financial oversight to build trust in institutions and prevent systemic risks.
Ghana’s financial sector must be guided by principles of equity, inclusivity, and sustainability. Reviving our indigenous banks is not just a financial decision—it is an investment in the future prosperity of our people. Together, we can build a resilient economy that works for all.
