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Ghana’s Missing Millions presents Strong Case for Bitcoin

According to reports, the Ghanaian government has stepped up its crackdown on the country’s banking system, with close to 70,000 facing potential financial ruin. This ‘cleanup’ of the West African nation’s banking system has left many account holders wondering whether their life savings have been wiped out.

The crackdown has been devastating, with the number of lenders slashed by a third as well as the shutdown of 23 savings and loan firms. The operation also triggered a panic among fund managers leading to a selling spree and a mass liquidation of assets.

Mass Liquidation

The mass short orders that were triggered by the crackdown, led to a $1.6 Billion wipeout, which translates to over a third of the assets supervised by local fund managers for retail and institutional investors in the country. Ghana’s top financial top dog, the Ghana Securities and Exchange Commission, has recently piled the pressure on 20 local fund managers it suspects of violating set rules.

The Ghanaian SEC has prohibited asset managers from receiving any new investments out of fear that the funds may be used to payout existing investors. This lockdown by the SEC has left as many as 70,000 people disgruntled as they seek to find out whether their savings are safe. Lord Mensah, a senior finance lecturer at the University of Ghana had this to say about the situation;

“It’s cutting across all the finance houses and when it happens like that the government needs to step in to build confidence again. There’s nothing we can do apart from making sure that we create that necessary environment to regain investors’ confidence again”.

Slim likelihood of government bail-out

Incase these fund managers go down, the likelihood of the government bailing out burnt investors is pretty slim and many in the country are already calling out the government for failing to prevent such a scandal. Kwadwo Kusi-Frimpong, a financial crime Governance and Regulatory expert wrote;

“The issue Ghana faces is more about having adequate system and controls in place to ensure that there is no room for such things to happen”.

Bitcoin the answer?

Crypto enthusiasts watching the situation in Ghana unfold from a distance, did not hold back their commentary. A Crypto industry observer ‘Rhythm Trader’ reacted to the situation in Ghana by stating that financial management should not need a Middleman and that Bitcoin was the answer.

A lot of cynics would probably disagree with Rhythm Trader citing Bitcoin’s volatility. But for about 70,000 Ghanaian investors, sticking to traditional investment vehicles has proved to be way more risky and possibly costly.

Image Courtesy of banknote24.eu

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