He said although the action might seem harsh and harmful to the sector, it would actually do a lot of good in terms of boosting confidence in the sector.

“As a former banker and someone that has worked extensively in the financial sector, I actually see such a move as a good one. I say this mainly because it would be a disaster for banks in a country to be under-capitalised.

That would be really bad for the banking sector,” he said in an interview with the GRAPHIC BUSINESS.

“People in the country would have lost confidence in the sector if the BoG had left these institutions to collapse,” he stated.

Mr Gorab cited a similar happening in the United States of America in 2008 as a typical example of what was happening in Ghana.

“This is not far-fetched at all, we saw this happen in the United States around 2008.

The happening in the United States of America affected the world at large and it took massive bailouts of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world’s financial system.

Once this was addressed, the sector became stronger,” he pointed out.

High growth potential

Mr Gorab went on to suggest that for many investors, Ghana had a very high growth potential and it would take more than a shake-up in the banking sector for investors to lose confidence in investing in the country.

“Ghana’s growth rate is usually between five and seven per cent. I mean that’s higher than China. And naturally, if you look at the macro level, West Africa versus other regions in the world, I don’t know which country out there is growing at that rate,” he said.

“So what the basics investors look out for are a good legal framework, which Ghana already has, including a good government and a good level of bureaucrats. It’s encouraging,” he added.

He went on to laud Ghana’s move to exit the International Monetary Fund (IMF), saying: “That’s an incredible accomplishment even though I know it was a tough decision to make because it is not easy to bring down subsidies and government deficit.”