Sam Bediako Asante - CEO, Sambed Consult
Financial Consultant and CEO of Sambed Consult, Sam Bediako Asante believes pensioners are likely to be most impacted by the Bank of Ghana’s directive asking banks not to pay dividends to shareholders for the 2019 financial year.
He argues that such persons, who rely largely on proceeds from the profits of companies listed on the Ghana Stock Exchange, will bear the burden of the non-payment of dividends this time around.
This is because pension administrators such as the Social Security and National Insurance Trust (SSNIT) are expected to lose investment income from their bank holdings, a situation that eventually affects the pensioners’ income.
The Bank of Ghana, as part of measures to improve the liquidity of banks due to COVID-19, has asked financial institutions not to pay dividends to shareholders.
Though the move is expected to boost the granting of loans to customers, Mr Bediako Asante said the losers should resort to other income-generating ventures to reduce the impact on their finances.
“Majority of such investors who are usually pensioners and relying on such dividend payments as their source of income are going to be hit hard. So, with that instruction by the bank of Ghana, I think it didn’t come at the right time. People were actually seeing to the effect that they will have something from their investment through the Ghana Stock Exchange by way of dividend payment through these banks. And not only that, even those who have other investments in other financial institutions under the supervision of the Bank of Ghana are also going to be affected,” he said.
BoG’s directive to banks and SDIs
The Bank of Ghana in a statement on April 20, 2020, directed all banks and Specialized Deposit Institutions (SDIs), to refrain from declaring and paying any dividends or distributing reserves to shareholders.
According to the financial sector regulator, the decision was taken to ensure banks and SDIs are better able to support their customers throughout the COVID-19 pandemic period.
However, the central bank had already introduced some interventions to alleviate the economic hardships on individuals as a result of the COVID-19 pandemic.
Some of these interventions are the reduction of the monetary policy rate from 16 per cent to 14.5 per cent, lowered reserve and capital requirements as well as reduction in mobile money transaction charges.