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Ghana's Financial Sector

After the Economic Recovery Program (ERP) and the Structural Adjustment Program (SAP) in the 1980s, the central bank restructured the operations of the financial institutions through the Bank of Ghana Act, 2002 (ACT 612) and the passage of the Ghana Banking Act (ACT 673) of 2004 to provide regulatory framework and to change the scope of the banking products and services in the country even though banks were still faced with significant Non-Performing Loans (NPL) and bad debts (Ziorklui et al. 2005). After recovery from the 2008 financial crises, banks became more cautious on investment and portfolio allocation and continued to reduce their NPL. In 2016, the Bank of Ghana passed the Specialized Deposit-taking Institutions Act, 2016 (Act, 931) as amended to consolidate all the laws relating to deposit-taking.

The BOG, (2017) increased the minimum capital requirement of banks from 120 million to GHS 400 million and gave commercial banks a year to meet this requirement or show concrete plans of recapitalization. This was the beginning of the banking sector clean-up by the Bank of Ghana. First, was the approval of the take-over of two banks; Capital Bank and UT bank by GCB bank in 2017. Further directives saw the approval from the central bank to consolidate five banks in Consolidated Bank Ghana (CBG). These banks include; Unibank Ghana, Construction Bank, Beige Bank, Royal Bank Ghana and Sovereign bank. Further directives from the central bank following the reforms saw the approval of mergers between OMNI Bank and Sahel Sahara Bank in OMNIBSIC Bank and others reducing the total number of banks from 34 to 23 as at January 2019.

In addition to this, in 2019, the bank of Ghana further revoke the licenses of over 300 microfinance companies and 23 savings and loans and finance house. Government through the Bank of Ghana have indicated that, no depositor would lose their deposit with any of the banks affected in the reforms process. An estimated Ghs 14 billion has been used so far for these reforms. Restoration of calm in the financial sector has remained a major concern to stakeholders since the clean-up exercise began in 2018. Even though depositors have been assured of their funds, there is the need to increase confidence in the financial sector and to create awareness on the need to save and create wealth for the future.

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