Claim: The World Bank has commended Ghana’s President Nana Akufo-Addo for strengthening the country’s banking sector, a viral WhatsApp message alleges.
Verdict: Misleading. DUBAWA’s Investigations showed that the Bretton Wood institution was impressed with the state of Ghana’s banks. “The banking sector is stronger and better capitalised than in the period immediately after the Domestic Debt Exchange Program (DDEP), but some risks remain,” the 8th Ghana Economic Update Report published by the World Bank in June 2024 said. However, the institution did not directly attribute the growth of the banking sector to Akufo-Addo, as captioned in the flyer.
Full Text
A viral WhatsApp message has alleged that the World Bank has lauded Ghana’s President Nana Akufo-Addo for making the country’s banks “strong enough.”
The assertion was contained in a flyer with the logo of the Bretton Wood institution embossed on it.
During a major clean-up by the Bank of Ghana, nine banks collapsed, and three merged between Jan. 2017 and 2020.
DUBAWA’s research has revealed that the exercise reduced the number of banks operating in the West African country from 36 to 23.
Read news reports on the banking clean-up in Ghana here, here, and here.
Nearly four years after Ghana’s major banking shake-up, a flyer has gone viral saying the World Bank has commended President Nana Akufo-Addo for strengthening the country’s banks.
“[President] Akufo-Addo made Ghana’s banks strong enough,” the World Bank allegedly said.
DUBAWA decided to probe the claim due to its virality in West Africa.
Verification
DUBAWA’s investigations showed that despite worrying about some challenges in the banking sector, the Bretton Wood institution was generally impressed with the state of Ghana’s banks.
The World Bank, in its 8th Ghana Economic Update Report, published in June 2024, said the country’s banks are “stronger and better” than before.
“The banking sector is stronger and better capitalised than in the period immediately after the Domestic Debt Exchange Program (DDEP), but some risks remain,” the global financial body said.
See paragraph 1 of page 8 and paragraph 35 of page 29 of the report here.
The Domestic Debt Exchange Programme (DDEP) was a public offer to Ghanaian bondholders to trade their high-yielding bonds for lower-yielding versions of much longer maturity periods.
Experts revealed that Ghanaian banks’ Expected Credit Losses (ECL) on existing bonds and Treasury bills during the programme were more than GHȼ15 billion.
Commenting on the Domestic Debt Exchange Programme, the World Bank said that despite the programme’s impact, Ghanaian banks “continue to implement their approved capital restoration plans in line with BoG’s (Bank of Ghana) requirements.”
“Bank profitability has improved, with the return-on-equity after tax reaching 34.2 per cent in December 2023, up from -34.4 per cent in December 2022, while the return on assets rose to 5.4 per cent from -3.8 per cent during the same period,” the World Bank said on paragraph 35 of page 29 of its June 2024 report.
Despite the Bretton Woods institution’s verdict on Ghana’s banking sector in its report, the Communications Officer of the Country Office, Kennedy Fosu, told DUBAWA that they did not create the flyer containing their logo.
“We have not posted anything on Social Media in the Banking sector. Kindly check the recently released 8th Economic Update report on exactly what it says on page 29, item 35 about,” he told DUBAWA.
Conclusion
The World Bank said Ghana’s banks are “stronger and better” after the Domestic Debt Exchange Programme carried out in 2023. However, presenting the World Bank’s comments in 2023 as a current development is misleading.
Source: dubawa.org