The Bank of Ghana, BoG has given approval to 11 out of 23 banks to pay dividends to shareholders with respect to the 2020 financial year.
Following the effect of Covid, the Central Bank introduced some regulatory measures including the need for financial institutions to meet certain key requirements before they could pay dividends to shareholders.
The move is to prevent any pressure on the cedi and the economy as some of the payments were to go to investors outside the country.Â
Some banks including EcoBank, GCB bank, and Cal bank have already paid dividends to shareholders.
Deputy Head of Banking Supervision at the Bank of Ghana Ismail Adam explained that the idea is to make the institutions robust.
"And the idea was to make the institutions more robust and resilient such that they would not suffer because of the pandemic. So one of the main things that we did was to say that we are putting a hold on paying dividends so that we build enough capital to meet whatever shocks that will emanate from the pandemic.
"But we also said if you meet the requirement you will be allowed to pay dividends...Out of the 23 banks that we have I think 11 of them which is almost 60% we gave approval for them to pay..."
 The Bank of Ghana in April 2020 directed banks and Specialised Deposit-Taking Institutions, SDIs to desist from declaring or paying dividends and from making other distributions to shareholders for the financial years 2019 and 2020.
BoG in a statement said, "Reference is made to the Bank of Ghana’s Monetary Policy release dated 18th March 2020 on measures to contain the impact of the COVID-19 pandemic and to the Bank’s subsequent Notice No: BG/GOV/SEC/2020/01 on the permitted utilisation by banks and Specialised Deposit-Taking Institutions (SDIs) of various capital and liquidity reliefs provided by the Bank of Ghana."
The BoG said any bank or SDI can only do so "unless the Bank of Ghana was satisfied, that such institutions met the regular prudential requirements and were not relying on the additional liquidity released by the regulatory reliefs provided by the Bank of Ghana."
The Bank of Ghana indicated that it would continue to monitor the evolving impact of the pandemic on banks and SDIs and on their customers, and would issue further directives as required.
In furtherance of the above, and to further ensure that banks and SDIs are better able to support their customers throughout the COVID-19 pandemic, to absorb any potential operational losses for banks and SDIs from the COVID-19 pandemic, the Bank of Ghana
now directs that all banks and SDIs desist from declaring or paying any dividends or distributing reserves to shareholders, and from making any irrevocable commitments regarding the declaration or payment of dividends to shareholders, until further notice.
For the avoidance of doubt, shareholders in this context means holders of Common Equity Shares (CET1) and Additional Tier I (AT1) capital instruments of banks and SDIs.
All Banks and SDIs are to take note of the above directive for immediate compliance.