Still on the deliberations of the impact of domestic debt exchange program (DDEP) on the various sectors and economy as a whole, the former President of the Ghana Association of Banks(GAB), Mr. Alhassan Andani, divulged that even though DDEP is a very difficult situation, it could serve as a positive turning point for Ghana.

This positive turning point, according to him, will only be a manifestation if the country takes up the bold step to face issues occasioned around the current economic situation, and accept the DDEP initiative to fully address them in order to prevent a return.

Warning against actions of the past, Mr. Andani indicated that if pertinent issues are ignored for stopgap measures to bring short-term stability, the country would end up repeating the past cycles over and over again. Hence, “leading to a continuous economic turmoil”, he said

This, he said, would fuel despondency and elicit to a distrust of institutions and state actors among the citizenry.

Speaking during an interview, Mr. Andani averred that looking at the immediate hardship DDEP tends to pose on sectors and individuals makes it a very difficult situation, but could be a positive turning point for Ghana if Ghanaians face up to the issues that brought the country here and say never again by adopting the right steps.

“But if we bury our heads in the sand and try to hide all the issues that brought us here, just placate it and get along, we will get back to it. And what now then happens is when people become despondent, disbelieve leaders and institutions, God only knows what nation that then becomes.
“So we are actually at a very interesting point, as I said, depending on how we face up to it. It could be a very positive turning point and we will take concrete steps and get ourselves educated as private individuals, institutions and particularly government and say never again. We will recalibrate our actions so that we can move forward strongly. But again, if we placate and refuse to tackle the real issues, we will create despondency.”
Mr. Alhassan Andani

Commercial Banks Should Not Be Blamed For Selling Cocoa Bills

In line with the DDEP measures, Mr. Alhassan Andani urged that despite the long run positive impact of the initiative, some immediate measures taken towards achieving it should be well scrutinized.

Mr. Andani stated this citing COCOBOD’s default payment as an example. He indicated that regardless all efforts to attain DDEP’s target, BoG’s instruction to roll over cocoa bills without customers consent and blaming Commercial banks for selling cocoa bills to customers is never an option

According to him, the cocoa bills were one of the safest bond instruments on the market and thus a preferred choice for customers who wanted very low risk bonds to buy.

Emphasizing on what made cocoa bills particularly enticing, Mr. Adani revealed that the issuer, COCOBOD, has a better credit risk than the government of Ghana, making it a very credible institution.

“First of all, let’s not miss it. What is the credit rating of cocoa bill? I have been in 14 COCOBOD syndications, 14 international syndications as a lead player. And I always said how come that COCOBOD has a better credit risk than the government of Ghana which owns it a 100%. And it was simple because they sold cocoa in US dollars which was externalized and the borrowers sat around the money before it comes into Ghana.
“So COCOBOD borrowed sometimes at best rates, I mean, 67 basis points was the highest I saw in a very long run. Otherwise they were borrowing at 15, 25, 30 basis points above liable when Ghana government itself was borrowing at 8 above liable or 7 above liable. Think about it.”
Mr. Alhassan Andani

He noted that allowing debt on the cocoa bills was what led to the current situation.

His comments followed Bank of Ghana’s directives to banks not to pay customers their maturing cocoa bills investments, following cash flow challenges facing COCOBOD.

“COCOBOD and cocoa bills is a kind of risk instrument you don’t want any debt on, and we should have done everything possible to prevent that. Not who bought it and who didn’t buy it. It wasn’t a weakly packaged deal, the subprime you are talking about was a lot of rotten debt hidden into a credit package.
“This is a very credible institution that as I said in the international market was rated better than the Ghana government. So if they have a bond and the bank bought it and even had clients who had wanted very safe bonds and you recommend it to them to buy, really did you do anything wrong? So, let’s not divert the issue. What has happened to hurt the credibility of COCOBOD or the COCOBOD bills which were really really highly rated? That’s what we should be looking at.”
Mr. Alhassan Andani