Failure of a number of financial institutions and banks in Ghana over the past few years has rekindled fear among people relating to the financial system in this country. Although local crises have their own peculiarities, they are similar to global financial scandalous cases; in this case, the case of fake accounts at Wells Fargo that shook the United States in 2009-2016. The realization of such similarities has important lessons on how Ghana can consolidate its financial sector and avoid such ethical malpractices.
The Global Template: Wells Fargo’s Toxic Culture
Wells Fargo, which is one of the largest banks in America, opened more than 3.5 million bogus customer accounts in a period of seven years. They used unauthorized accounts, overbilled people with needless activities, and falsified books to prove unreachable sale quotas. It was not just some rogue employees at work in the scandal but a systemic failure, fueled by a pressurized sales culture, unrealistic quotas, and a leadership that cared more about profits than their morals.
The motivation at the bank through its Going for Gr-Eight strategy/initiative required that the employees sell eight financial products to each client. Where employees did not manage to achieve such targets in an honest way, they engaged in fraud. Individuals who raised their concerns were gagged, moved, or sacked. The message was apparent: you get results by any means necessary.
Challenges in Ghana’s Finance Sector
The recent financial sector cleanup in Ghana that led to the license cancellation of nine financial institutions and more than 400 microfinance institutions showed similar breaches when it comes to ethical lapses (Bank of Ghana, 2019). False records, underestimating capital guidelines, and systematic manipulation of financial health—findings of investigations by the Bank of Ghana reflect the major aspects of the Wells Fargo scandal.
Such local banks as Capital Bank, UT Bank, and Beige Bank failed because they were found guilty of committing crimes, such as the opening of fictional deposits and lending of money (Casely-Hayford, 2017). Capital Bank LTD was said to have acquired its license on false grounds, and GH¢ billion worth of noncollectable debts accumulated to Capital Bank and UT Bank, leading to their collapse. These collapses, though affecting the economy of Ghana seriously, have been the trend all over the world whereby financial institutions are focused on short-term positive outputs rather than focusing on sustainable values and the welfare of the customers.
The microfinance industry has been especially badly hit. Being under pressure to demonstrate quick growth and appeal to the investors, many institutions performed aggressive lending and performed dubious accounting procedures. The institutions contributing to financial inclusion betrayed the promise by focusing on expansion and unethical activities.
The Pressure Cooker Effect
The financial industry in Ghana has its own peculiarities…
Read More: Lessons from Wells Fargo for Ghana’s Financial Sector
