In a significant move towards resolving the prolonged issue of locked-up funds in the banking sector, the government of Ghana has earmarked GH¢4.1 billion to compensate customers affected by the collapse of Gold Coast Fund Management Company Limited and other Asset Management Companies (AMCs).
This allocation represents the remaining portion of the GH¢8.9 billion locked-up funds from the banking sector clean-up exercise.
Abena Osei-Asare, the Minister of State designate at the Ministry of Finance, revealed this development during a session with the Committee investigating the government’s failure to pay customers of locked-up funds. She emphasized that the release and disbursement of these funds are contingent upon the availability of resources to the government, pointing out that these figures are estimates and subject to variations based on incoming revenues.
For instance, Osei-Asare highlighted the budgetary allocations and actual payments made in previous years as indicative of the fluctuating nature of government finances. In 2020, the government allocated GH¢3.1 billion and disbursed GH¢3.4 billion, while in 2021, despite budgeting GH¢5.5 billion, only GH¢1.36 billion was paid out, underscoring the dependency of payments on available funds.
The categorization of customers awaiting payment is based on the size of their investments. Those whose investments exceed GH¢50,000 are yet to receive their locked-up funds, while individuals with investments below this threshold have already been compensated.
Delay In Redeeming The Remaining Funds
The delay in redeeming the remaining funds is primarily attributed to legal challenges arising from the revocation of AMC licenses during the banking sector clean-up. Ongoing litigation has hindered the timely disbursement of funds, leading to a pause in allocations in the 2022 and 2023 fiscal years.
Despite these challenges, Osei-Asare clarified that individuals with investments below GH¢50,000 have been prioritized for redemption on humanitarian and compassionate grounds, following legal action against the government and its agents over the liquidation of AMCs.
The delay in redeeming the remaining amount of locked-up funds in the banking sector clean-up exercise can be attributed to various factors, as explained by Abena Osei-Asare, the Minister of State designate at the Ministry of Finance. One significant factor contributing to this delay is the legal challenge brought against the government regarding the revocation of licenses of the Asset Management Companies (AMCs) involved in the clean-up.
Osei-Asare elaborated, stating, “Another cause of delay is the litigation. It has started and was at its peak, and we had to stop the payment.” This legal hurdle has posed a significant obstacle to the timely disbursement of funds, resulting in the absence of allocations in the 2022 and 2023 fiscal years.
Additionally, Osei-Asare clarified that the redemption of investments below GH¢50,000 was carried out on “humanitarian and compassionate grounds,” following legal action against the government and its agents over the liquidation of the AMCs. This underscores the government’s commitment to addressing the concerns of affected customers, particularly those with smaller investments.
The allocation of funds for compensation was based on the validation conducted by the Securities and Exchange Commission (SEC), ensuring that the government remains committed to redeeming the locked-up funds of the customers. According to records from the SEC, approximately 28,000 customers are yet to be settled, highlighting the scale of the challenge at hand.
The formation of the Committee chaired by Joe Ghartey was necessitated by a petition brought before the House by Mahama Ayariga, the Member of Parliament for Bawku Central, on behalf of the affected customers. The Committee comprises members from various political backgrounds, including both the ruling New Patriotic Party (NPP) and the National Democratic Congress (NDC), as well as technical experts, demonstrating a collaborative effort to address this pressing issue.
As the government continues its efforts to resolve the outstanding payments and navigate the legal complexities surrounding the banking sector clean-up, affected customers can find reassurance in the commitment shown by both policymakers and regulatory bodies to deliver justice and provide relief in a timely manner.
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