Financial Consultant and CEO of Sambed Consult, Sam Bediako Asante, says pensioners are likely to be impacted the most 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 brunt of the non-payment of dividends this time around 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 them not to pay dividends to shareholders.
Though this is to boost the granting of loans to customers, Mr. Bediako Asante told Citi Business News 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 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 the regulator of the financial sector, the decision was taken to ensure that banks and SDIs are better able to support their customers throughout the COVID-19 pandemic period.
However, the bank had already introduced some interventions to alleviate the economic hardships on individuals as a result of the COVID-19 pandemic.
It earlier reduced the monetary policy rate from 16 percent to 14.5 percent and also lowered reserve and capital requirements and reduced mobile money transaction charges.