Financial Services
From The Report: Ghana 2024
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The Domestic Debt Exchange Programme that launched at the end of 2022 has helped stabilise inflation. This is expected to foster sustainable growth, injecting optimism into the sector and the overall economy. However, macroeconomic headwinds such as elevated government debt and inflation have constrained the maturation of Ghana’s capital markets, leading to a slowdown in the number of initial public offerings launched in recent years. The insurance sector has faced similar constraints, with its growth trajectory tempered by the general economic downturn despite new regulations and increased revenue. However, as more Ghanaians move into the formal economy, demand for insurance products is expected to grow, in turn creating more opportunities for companies operating in the sector.
This chapter contains a viewpoint from Ernest Addison, Governor of the Bank of Ghana, and interviews with Chris Ofikulu, Regional CEO, UBA West Africa and Regional Director, UBA Ghana; Abena Amoah, Managing Director, Ghana Stock Exchange; Daniel Ogbarmey Tetteh, Director-General, Securities and Exchange Commission; and Shaibu Ali, Managing Director, KEK Insurance Brokers.
Articles from this Chapter
New frontiers: The authorities work to strengthen the sector, while turning to technological innovation to help bolster penetration
Meeting obligations: Government initiatives are helping reduce the country’s arrearsOBGplus
In December 2022 the Ghanaian government implemented the Domestic Debt Exchange Programme (DDEP), a voluntary initiative under which eligible bondholders swapped bonds for new securities with differing rates and maturities. Later that month Ghana struck a deal with the IMF for a three-year, $3bn loan to help alleviate the country’s debt. Upon closing in February 2023, 85% of a total GHS97.7bn ($8.9bn) in domestic bonds eligible under the DDEP had been tendered and accepted. The government has…
Strength of support: Ernest Addison, Governor, Bank of Ghana, on addressing the various risks related to debt sustainabilityOBGplus
Viewpoint: Ernest Addison African economies are faced with acute debt challenges, underscored by rising social and infrastructure needs. This is coming amid spillovers from the Covid-19 pandemic, the war in Ukraine, the tightening of global financing conditions and climate change. Public debt in sub-Saharan Africa has reached levels last seen in the early 2000s. The resulting increased debt service burden, together with complex creditor composition, has heightened risks to debt sustainability to…
Digital future: Chris Ofikulu, Regional CEO, UBA West Africa; and Managing Director, UBA Ghana, on the impact of new technologies and services on the financial sectorOBGplus
Interview:Chris Ofikulu How can financial institutions leverage the entry of financial technology (fintech) firms and telecommunications companies in the banking sector? CHRIS OFIKULU: Fintechs have emerged as invaluable partners in the digitalisation of the sector. Their rapid entry into the financial ecosystem has ushered in a wave of opportunities, including leveraging big data. Telecommunications firms and fintechs possess extensive customer databases, which they have diligently curated…
Ease of transfer: A number of remittance-focused financial technology players are: expanding operations in emerging marketsOBGplus
Financial technology (fintech) firms are gaining market share that was formerly the preserve of established remittance service providers. Remittances have grown in importance in recent decades and now constitute the largest source of foreign income for many developing economies. They also tend to be countercyclical, increasing during economic downturns or natural disasters when other capital flows generally dwindle. Growth has only gathered pace, with the importance of remittances as a source of…
Innovative inflows: Abena Amoah, Managing Director, Ghana Stock Exchange, on how new public initiatives, technology and diversification can increase market health and decrease riskOBGplus
Interview:Abena Amoah How is public policy positioning Ghana’s capital markets as an attractive investment destination? ABENA AMOAH: Ghana’s stable political environment and continued economic growth over the years have created a favourable environment for investment. Efforts to attract more listings and increase market liquidity provide opportunities for both local and international investors to participate in the country’s capital markets. Launched in May 2021 the Capital Markets…
Sector strength: Revised guidelines and anticipated listing of new government- owned businesses highlight potential for domestic marketsOBGplus
As recent economic headwinds worldwide affected Ghana’s capital markets, with rising inflation and high borrowing costs resulting in lower levels of liquidity, the authorities have worked in recent years to increase the depth and breadth of the country’s capital markets. Indeed, the country’s capital markets feature a stock exchange, a dedicated exchange for small and medium-sized enterprises (SMEs), a fixed-income market for government and corporate bonds that was established in 2015, and,…
Market offerings: National plan to broaden investor base sees developmentOBGplus
Improving the diversification of investment products and the liquidity of the securities market has been a government priority in recent years. One key initiative is the Capital Market Master Plan (CMMP) being implemented by the Securities and Exchange Commission (SEC). The CMMP is divided into three phases – 2020-22, 2023-25 and 2026-29 – and has set a 2024 target of increasing the amount raised via equity to GHS6bn ($545m) per year and the amount raised by bonds to GHS40bn ($3.6bn). Ghana’s…
Building resilience: Daniel Ogbarmey Tetteh, Director-General, Securities and Exchange Commission (SEC), on strengthening and deepening capital market offerings and attracting investmentOBGplus
Interview:Daniel Ogbarmey Tetteh Which strategies have strengthened the attractiveness of Ghana’s capital markets? DANIEL OGBARMEYTETTEH: Coordination between stakeholders is key to making Ghana an attractive destination for both domestic and international investors. This includes consolidating regulatory frameworks, diversifying investment options, improving investor education, building robust market infrastructure, promoting strong corporate governance, enhancing financial inclusion…
Lines of business: Efforts to increase penetration include regulatory reforms and diversified distribution channelsOBGplus
Ghana’s insurance industry has been transformed in recent years by regulatory reforms, led by the National Insurance Commission (NIC). The commission has prioritised modernising the sector, as well as enhancing its accessibility and reach. Supported by these efforts, the sector has expanded rapidly, with total gross written premium growing by 232% between 2018 and 2022. Along with the increase in premium, the number of insurance providers has expanded to keep up with demand. This has allowed the…
Into the fold: The authorities work to increase penetration amid a push to modernise and raise awareness about the sectorOBGplus
While the authorities have prioritised enhancing insurance penetration in Ghana, uptake remains stubbornly low. Indeed, insurance penetration measured as gross premium as a share of GDP hovered around 1% between 2016 and 2022, according to the National Insurance Commission (NIC). By ways of regional comparison, in 2021 South Africa had the highest penetration rate on the continent, at 17%, followed by Namibia (6.3%). However, other indicators have shown progress: insurance coverage – or the percentage of the population that has insurance services – reached 44.6% in 2022. Meanwhile, life insurance penetration, ticked upwards from 29% in 2015…
Increasing coverage: Shaibu Ali, Managing Director, KEK Insurance Brokers, on boosting insurance penetration and ensuring data protectionOBGplus
Interview:Shaibu Ali Where do you identify major factors underpinning growth in the insurance sector? SHAIBU ALI: Ghana’s insurance industry has seen satisfactory growth in recent years, with gross premium increasing more than 10-fold between 2010 and 2022. The insurance market is expected to continue evolving, with a high prospect of further expansion due to the untapped markets of various sectors. Insurance penetration in the country hovers at 1%, with sectors like agriculture – which contributes 54% to GDP and employs about 40% of the population – still largely uninsured. In addition, not everyone has benefited equally from insurance…
Change ahead: Emerging markets implement changes in line with updates to international accounting standardsOBGplus
Insurance companies worldwide have been preparing for the most significant change in global accounting standards in almost two decades. On January 1, 2023 the International Financial Reporting Standard (IFRS) 17 came into effect. Replacing the previous standard, IFRS 4, which was issued in 2004, IFRS 17 aims to standardise insurance accounting globally through a uniform approach in order to improve comparability and increase transparency. This is expected to help those in the industry better understand individual insurers’ financial positions, performance and risk exposure. The updated standard marks the first time a single IFRS accounting…
Safety net: New joint initiatives are catalysing action as the global insurance industry moves to mitigate environmental riskOBGplus
With the launch of a new joint initiative to support those countries that are most vulnerable to the effects of climate change, the global insurance industry is evolving in ways that could carry important implications for business in emerging markets. One such initiative, the Global Shield against Climate Risks (GSCR) was announced by the ministers of finance of the so-called Vulnerable Twenty Group (V20) and the G7 after the COP27 UN Conference on Climate Change in Sharm El Sheikh Egypt in November 2022. It seeks to address existing weaknesses in the financial protection structure in climate-vulnerable economies through pre-arranged financing…
