This Selected Issues paper reviews trends in GDP and their impact on poverty reduction in Ghana. It highlights structural constraints that are believed to have affected output growth, along with potential sources of increases in output in future years. The paper analyzes trends in the main production sectors, and presents an assessment of the underlying determinants of growth and poverty reduction. It also explores the key elements of the authorities’ strategy to raise GDP per capita growth as set out in the Ghana Poverty Reduction Strategy.

Abstract

This Selected Issues paper reviews trends in GDP and their impact on poverty reduction in Ghana. It highlights structural constraints that are believed to have affected output growth, along with potential sources of increases in output in future years. The paper analyzes trends in the main production sectors, and presents an assessment of the underlying determinants of growth and poverty reduction. It also explores the key elements of the authorities’ strategy to raise GDP per capita growth as set out in the Ghana Poverty Reduction Strategy.

II. Reforming Ghana’s Financial Sector23

41. This section undertakes a preliminary assessment of the current state of Ghana’s financial sector and of related policy actions. The paper summarizes information on the broad institutional structure of the sector, previously identified weaknesses, and recent or prospective reforms. The starting point for this assessment is the Financial Sector Assessment Program (FSAP) report by the staffs of the World Bank and the Fund, issued in 2001. Particular emphasis is placed on the financial sector’s ability to contribute effectively to economic development in Ghana, including through the provision of rural banking and microfinance services. An update of the FSAP exercise is expected to be carried out by Fund and World Bank staffs later in 2003.

A. The Structure of the Financial Sector in Ghana

42. Ghana has a tiered financial system, with a broad range of financial institutions. The financial system includes commercial banks, rural banks, insurance companies, discount houses, finance houses, leasing companies, savings and loans associations, credit unions, and a stock exchange. Many of the institutions, however, remain underdeveloped, even by the standards of sub-Saharan Africa. The level of financial intermediation in the economy was judged in the 2001 FSAP report to be comparatively modest, and the formal banking system reaches only about 5 percent of all Ghanaian households. The banking penetration ratio, at one bank branch per 54,000 inhabitants, is relatively high, but the coverage varies widely, being six times higher in the greater Accra region than in the northern parts of the country. About half of all bank branches in the interior belong to a single state-owned commercial bank, the Ghana Commercial Bank.

Commercial banks

43. As of end-2001, there were seventeen banks operating in Ghana (Table II.1). Foreign investors hold a majority of the shares in eight commercial banks, and three banks are state-owned; there are nine purely commercial banks, five merchant banks, and three development banks.24 Measured by its aggregate balance sheet in relation to GDP, the banking sector grew rapidly between 1996 and 2000, due partly to financial deepening, and partly to loose monetary conditions, with real treasury bill rates close to zero in 2000. The bank assets-to-GDP ratio dropped from a peak of 44 percent at end-2000 to about 36 percent in 2002 as monetary conditions were tightened (Table II.2). While most financial activity is accounted for by four or five banks (Table II. 3), no single institution is dominant, and the potential for competition is considered to be well above the sub-Saharan Africa average.

Table II.1.

Ghana: Structure of the Banking Sector, December 2001

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Sources: Bank of Ghana; and Fund staff estimates.
Table II.2.

Ghana: Balance Sheet of the Banking System, 1996–2002

(In billions of cedis, unless otherwise indicated)

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Sources’ Bulk of Ghana, and Fund saff estimates.
Table II.3.

Ghana: Assets and Inabilities of the Banting Sector, 1998–2002

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Sources. Bank of Ghana, and Fund staff estimates.

44. Banking system soundness indicators portray a mixed picture The average capital adequacy ratio (CAR) was 14.9 percent in September 2002, well above the minimum 6 percent required by law; however, there was a significant dispersion by individual banks (Table II.4). The ratio of profit after tax to gross earnings dropped in 2001 to 29½ percent from an average of over 35 percent during 1996–2000 (Table II. 5). The average quality of bank loan portfolios (measured by the share of nonperforming in total loans) improved in 2000 with the closure of three insolvent banks, but then deteriorated during 2001, in part reflecting the effect of high real interest rates (Table II.6). Although the highest nonperforming loan ratios can be found in some of the smaller banks, this ratio was nevertheless above the system average in some of the largest banks in the country.

Table II.4.

Ghana: Capital Adequacy Ratio (CAR) of Banks, 1996–2002

(Bank capital as percent of assets)

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>Sources: Bank of (Jiiana; and Fund staff estimates.

Bank numbers in different tables do not correspond to the same bank. Excludes banks set up during the period covered in the table.

For the entire banking sector, including banks not listed in the table.

Table II.5.

Ghana: Banking System—Income Statement, 1996–2002

(In billions of cedis)

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Sources: Bank of Ghana, and Fund staff estimates
Table II.6.

Ghana: Quality of Loan Portfolio, 1997–2002

(Non-performing loans as percent of total loans)

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Sources: Bank of Ghana; and Fund staff estimates.

Bank numbers in different tables do not correspond to the same bank. Excludes banks set up during the period covered in the table.

Bank was closed in 2000.

For the entire banking sector, including banks not listed in the table.

45. The bulk of banks’ resources are absorbed by the public sector. The loan-asset ratio for commercial banks was only about 37½ percent as of end-2001, as banks preferred to park their resources in high-yield, low-risk treasury bills and Bank of Ghana bills (Table II.2). During the last few years, bank lending to the government (including direct advances, as well as investment in bills) has typically absorbed over one-half of total available resources (Table II.7). The residual resources available for lending to the private sector have been mainly channeled to the commerce and manufacturing sectors, while the agriculture, forestry, and fishing sectors have received less than one-tenth of total bank credit (Table II. 8).

Table II.7.

Ghana: Bank landing and Investment in Bills and Securities, 1996–2002

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Sources: Bank of Ghana; and Fund staff estimates.
Table II.8.

Ghana: Evolution of Bank Credit, 1996–2002

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Sources: Bank of Ghana; and Fund staff estimates.

46. The share of commercial banks’ foreign operations increased until 2000, but then declined. Between 1998 and 2000, the share of bank assets denominated in foreign currency increased from 27 percent to 35 percent but dropped to 30 percent in 2001, probably reflecting the increased stability of the cedi exchange rate (Table II. 9).

Table II.9.

Ghana: Foreign Assets and Liabilities of the Banking Sector, 1998–2001

(Percentages)

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Sources: Bank of Ghana; and Fund staff estimates.

Bank numbers in different tables do not correspond to the same bank.

Rural banks

47. The banking sector included 115 rural banks as of September 2002. These community-owned institutions, widely dispersed throughout the country, were first established in 1976 to provide commercial banking services to the rural population. The number of rural banks expanded significantly in the 1980s, but the rural banking system remains small in the aggregate, accounting for only around 3½ percent of total banking system assets as of end-2001 (Table II. 10). During 1997-2001, the assets of rural banks grew by an average of 46 percent per year, slightly faster than the growth rate of 41 percent per year of the assets of the overall banking system.

Table II.10.

Ghana: Rural Banks, 1997–2002

(In billions of cedis except where otherwise indicated)

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Sources: Bank of Ghana; and Fund staff estimates.

48. Since their establishment, rural banks have been primarily instruments for mobilizing the savings of the rural sector. The role of rural banks in providing credit and resources for rural development has remained constrained. As of end-2001, credit by rural banks amounted to only 30 percent of their assets (Table II. 10), and only 20 percent of credit extended by mral banks went to the agricultural sector. The bulk of rural bank assets is made up of investment in treasury bills.

49. Most credit operations by rural banks are based on microfinance lending techniques. These techniques are frequently implemented by (or with technical assistance from) from collaborating nongovernmental organizations (NGOs). The micro loans are generally short term (up to six months), of a small amount (generally up to US$75), and benefit from group guarantees. Repayment is normally made on a weekly basis.

50. Although the rural banking system remains weak overall, there has been an improvement in recent years. The proportion of rural banks failing to comply with the required 6 percent CAR dropped from about 60 percent in 1998 to 31 percent at end-2001. Improved supervision by the Bank of Ghana explains part of the improvement, although the continuing high noncompliance rate suggests that much remains to be done in this area.25 At the same time, rural banks are generally profitable, mostly reflecting their limited credit exposure and investments in high-yield government securities.

51. In 2001, the Apex Bank was founded to provide financial services for the rural banks and in due course to take over some supervisory and training functions for the sector. The Apex Bank has so far focused mainly on providing clearing services to rural banks and processing cocoa checks that are used in the payment of cocoa purchases by the licensed buying companies. In February 2003, the Apex Bank began acting as primary distributor of Bank of Ghana securities for the rural banks,26 while in the near future it plans to introduce short-term financial instruments to improve liquidity management in these banks.

Credit unions

52. Credit unions are thrift societies offering savings and loan facilities exclusively to members. They operate under a separate legal regime from the rest of the financial system, dating from 1968. Credit unions are small institutions in Ghana, with an average of only 400 members and average loan size of about US$150. As of December 2001, total deposits in credit unions reached about 100 billion cedis (less than 0.3 percent of GDP), while outstanding loans stood at 71½ billion cedis, with a total membership of almost 104,000.

53. Credit unions expanded rapidly in the 1970s, followed by a steady decline. From about 500 credit unions in the mid-1970s, the number of credit unions contracted to 250 as of end-2001 (Table II. 11). This trend reflected deteriorating financial conditions owing to macroeconomic instability, as well as organizational weaknesses, including the maintenance of a low-interest policy for loans and limited managerial capabilities.

Table II.11.

Ghana: Licensed nonbank Financial Institutions, 1999–2002

(Number of institutions)

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Sources: Bank of Ghana; and Fund staff estimates.

54. Credit unions have not yet been brought under the direct supervisory authority of the Bank of Ghana. Credit unions are grouped under the Credit Union Association and are registered by the Department of Cooperatives as cooperative thrift societies. However, the proposed Credit Union Bill (see below) is expected to lessen this problem by recognizing the Credit Union Association as the regulatory authority for all the credit unions, with powers to intervene to ensure transparency and accountability and to enforce strict reporting requirements.

Other nonbank financial institutions

55. Following the passage of a new law in 1993, the nonbank financial institutions (NBFI) sector expanded rapidly. As of end-2001, there were thirty-eight NBFIs, excluding credit unions (Tables II. 11 and II.12). These comprised:

  • Nine savings and loan associations (S&Ls). In a few cases, S&Ls represent the transformation of NGOs into licensed financial institutions. S&Ls serve a market niche that seems to be too small for established commercial banks, using market traders and susu collectors as their main clients,27 and in many cases they are trying to apply best practices in the area of microfinance. Undercapitalization is a problem in some of the S&Ls.

  • Six leasing companies, engaging in 2-3 year leasing contracts, mostly for imported equipment, in all the main formal sectors of the economy.

  • Fifteen finance houses, specializing in small business finance through a variety of short-term instruments, such as trade and warehouse financing., invoice discounting, and check discounting Commercial banks regard the nature and scale of this business as uneconomic for them, so competition is limited.

  • Three discount companies, engaged mostly in the interbank market but also providing some banking services for corporations.

  • The Housing Finance Company (HFC), which provides long-term credit for moderate-income home ownership and, more recently, has moved into construction finance. The HFC accounts for almost 30 percent of all NBFI assets.

  • Other entities include two building societies, which are facing capitalization problems, and two venture capital companies

Table II.12.

Ghana: Income Statement of Nonbank Financial Institutions, 2000–02 (In billions of cedis)

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Sources Bank of Ghana, and Fund staff estimates.

Insurance companies

56. The insurance sector is made up of the state-owned Social Security and National insurance Trust (SSNIT), eighteen insurance companies, and two reinsurance companies. These insurance companies, and especially SSNIT, dominate the country’s long-term investment resources. SSNIT faces a number of difficulties, including a high level of nonperforrning loans, a low average return to equity, and liquidity problems. Excluding SSNIT, the insurance sector is small, with no more than 3½ percent of the assets of the banking system in 2001 Also, it is highly concentrated, with a single company (the State Insurance Co.) holding one half of the sector’s assets and six other companies holding one-third of the assets; the other companies are all very small. Some insurance companies face serious capitalization problems.

57. Insurance companies are regulated by the National Insurance Commission (NIC). A new Insurance Bill that is being considered would enhance the supervisory powers of the NIC. This bill will also seek to increase substantially the capital requirements for insurance companies, and draw a clear separation between the life and nonlife business components.

Informal financial arrangements

58. Outside the formal sector, there also exist traditional arrangements (susu). These arrangements are used by low-income market participants for pooling savings and extending credit. Their operation is linked in particular to trading in rural and street markets. The susu system primarily offers savings products to help clients accumulate their own savings over a period of one month. Depositors generally deposit a fixed daily amount, which is returned to them at the end of the month for a fee equal to one-day’s deposit. Susu collectors may also make short-term advances to members of the group. Susu collectors, who are not regulated, are in many cases members of susu collectors’ cooperative societies.

The stock exchange

59. Ghana has a functioning stock exchange, although it is still at a rudimentary stage of development. The Ghana Stock Exchange (GSE) has only 24 listed companies, and only one non-Ghanaian company (Trust Bank, Ltd. from The Gambia). A single mining firm (whose shares are also traded on the London and New York stock exchanges) accounts for two-thirds of the value of shares quoted. Excluding this firm, the market capitalization of GSE-listed companies is only about 5 percent of GDP, less than half the average for other low-income developing countries. Daily trading volume is only about US$10-20,000. In 2002, the best performers in the GSE were bank shares The market for debt is similarly thin: there are only five publicly traded corporate bonds in Ghana, all dollar-denominated.

B. Progress in Financial Sector Reform

60. The authorities are committed to far-reaching reform in the financial sector. They have recently updated their Financial Sector Strategic Plan (FINSSP), which will frame their efforts in this regard.28 The “vision” of FINSSP is to achieve the following six key objectives: make the financial sector the preferred source of finance for domestic companies; promote efficient savings mobilization; establish Ghana as the financial gateway to the ECOWAS region; enhance the competitiveness of Ghana’s financial institutions, ensure a stronger but also more ‘user-friendly” regulatory regime; and achieve a diversified domestic financial sector within a competitive environment.

61. The authorities have made generally good progress over the past two years in the area of Financial sector reform. As can be seen from Appendix I, the focus during this period has been mainly concentrated on updating the legislation governing the financial sector. Other areas of progress have included an intensification of supervisory activity for both banks and NBFIs, and the restructuring of commercial bank claims on the state-owned Tenia Oil Refinery.

62. As regards the legal framework for the financial system, the reforms being pursued touch on areas such as increasing the independence of the central bank; enhancing the regulatory framework; introducing modern modes of payment; and improving the framework for control of money laundering. Several bills have already been passed or are in the process of being prepared. The Bank of Ghana Act was passed, while the Banking Bill, the Payment System Bill, and the Bills and Cheques Bill will soon be forwarded to parliament for legislative approval. In addition, work is ongoing on a number of draft bills that will then be submitted to the Attorney General for review, including the Anti-Money Laundering Bill, the Credit Union Bill, the Exchange Control Act, the Insurance Law, and the Financial Institutions (Nonbanking) Bill. In addition, the authorities are also working on a new Insolvency Bill (Bankruptcy Law) and revision of the Companies’ Code.

63. The new Bank of Ghana Act was approved in December 2001. It establishes and guarantees the independence of the central bank, and includes provisions aimed at enhancing the bank’s operational efficiency and strengthening its supervisory role. The law limits government borrowing from the central bank to no more than 10 percent of the current year’s government revenues, and requires any advances and loans made to the government to be approved by the Board of the Bank of Ghana. In keeping with the provisions of the Act, the Bank of Ghana divested all its shareholdings in banks under its supervision. The new law also paved the way for creation of a Monetary Policy Committee as the policy-making body of the central bank.

64. The new Banking Bill aims at enhancing significantly the framework for banking supervision in Ghana. In this regard, it will reinforce the relevant provisions of the Bank of Ghana Law. The proposed new bill will raise bank capital requirements (the minimum capital ratio would increase from 6 percent to 10 percent) and empower the central bank to alter the required bank capital adequacy ratio without prior approval from the Minister of Finance. The bill will set more stringent requirements for the granting of new bank licenses, and provide the central bank full authority to issue licenses (until now, the entry of a new bank required the prior approval of the Minister of Finance). In the event of bank distress, the Bank of Ghana has been empowered to take measures to protect the assets of depositors, including a merger with a healthier bank or the appointment of a liquidator Also, the proposed law contains clear and transparent exit procedures for insolvent banks, which are absent in the current law.

65. The new Payment System and Bills and Cheques bills also are expected to be in place in 2003. Taken together, they are expected to lay the foundations for a modern and efficient electronic payments, clearing and settlement system in Ghana, as well as its supervision by the competent authorities. Specifically, the Payment System Bill will provide the vital infrastructure to meet new challenges imposed by technological innovation, such as the use of electronic modes of payment, and the need to develop noncash payment products and clearing systems in order to reduce over-dependence on cash payments. This bill also provides for electronic information generated by the transfers to be admitted as evidence in court. The proposed Bills and Cheques Bill is a revision of the existing Bills of Exchange Act, its passage would allow the electronic presentation of cheques, to speed up the clearing and settlement process. These innovations are expected to reduce transaction costs significantly.

66. The authorities are also working on a new Anti-Money Laundering Bill. This law will, for the first time in Ghana, establish money laundering per se as a crime.29 Work on the proposed new law has been carried out by a committee made up of representatives from the Bank of Ghana, the commercial banks, the Ghana Police, the Bureau of National Investigation, the Immigration Service, and the Customs, Excise and Preventive Service. The draft legislation has drawn upon input from the U.S. Department of State, the IMF and the U.K. Financial Services Authority.

67. The Credit Union Bill seeks to create a regulatory body, the Credit Union Association (CUA), to govern the affairs of the credit unions. It is expected to work in a way similar to that of the Apex Bank set up to regulate the rural banks. Through the operation of the CUA (see above), credit unions will be brought indirectly under the aegis of the central bank and would thus be required to meet regulatory standards and minimum reporting requirements.

C. Enhancing the Financial Sector’s Contribution to Economic Development: The Key Obstacles

68. If the financial sector is to play a significant role in promoting economic development in Ghana, progress in setting up enhanced legal and supervisory frameworks would need to be complemented with additional measures. Three areas merit particular attention: (i) the distortions created by historically weak macroeconomic policies; (ii) adverse effects from state ownership and control, in both the financial and nonfinancial sectors; and (iii) institutional deficiencies in the rural/microfinance sector. This subsection looks briefly at each of these topics in turn.

Macroeconomic policy

69. A stable and consistent macroeconomic framework is essential to the development of the financial sector. However, Ghana’s macroeconomic policies over at least the past decade have been characterized by periodic lapses in financial discipline, leading to volatile and generally high inflation, large exchange rate swings, negative real interest rates for extended periods, and a buildup of domestic government debt that is approaching 30 percent of GDP. These features of the macroeconomic environment are considered to have had various negative effects on the scale and quality of financial intermediation, as evidenced by:

  • These policies have reduced the incentive to save, particularly in financial assets. Ghana’s financial saving rate and money-GDP ratio are lower than in other sub-Saharan Africa countries.

  • They have fostered a short-term perspective, among both savers and lending institutions. One-third of all bank deposits are demand deposits, and terms for bank loans rarely extend beyond one year. Even government domestic debt issues have been almost exclusively at 3-6 month maturities, until the introduction of three-year inflation-indexed bonds in late 2001.

  • Heavy domestic borrowing by government has crowded out private sector finance. Faced with an ample supply of relatively low-risk, high-return government paper (to which, moreover, low capital requirements apply), banks and other financial institutions have had little incentive to engage in—or develop the capacity for—lending and equity finance for the private sector.

  • Macroeconomic uncertainty is likely to have been a factor in deterring potential foreign investors. International rating agencies attach a very large weight to macroeconomic stability,30 and there is evidence from country studies that this variable has a major bearing on the volume of foreign direct investment.31

The influence of state ownership

70. Excessive state intervention in the economy leads to distortions that affect the ability of the financial sector to promote growth and development. During the 1990s, two thirds of the roughly 350 state-owned enterprises (SOEs) in Ghana were sold off. But the process has subsequently slowed, and no divestitures were completed in 2001-02. The list of SOEs remains long and, more important, continues to encompass some of the largest firms in the economy, notably in the energy, utilities, and transport sectors. This situation has at least two major implications for the effectiveness of the financial sector:

  • First, reflecting their significant losses, some of the large SOEs (such as the Tema Oil Refinery and the public utility companies) have been the recipients of massive amounts of directed lending from commercial banks. This has created a parastatal crowding-out effect that, in recent years, has been as large as that from domestic government borrowing. The ability of SOEs to tap directed credits has been greatly enhanced by continued majority state ownership and control of Ghana Commercial Bank, one of the largest banks in the country.

  • Second, the retention of huge amounts of corporate equity in state hands is likely to have held back the development of Ghana’s equity market, and to have limited the opportunities for an infusion of foreign capital (much of foreign direct investment into Ghana in the past has been associated with divestitures).

Deficiencies in the rural/microfinance sector

71. A dynamic rural/microfinance sector has been shown to play a key role in the expansion of the rural sector and small and medium-sized enterprises. The World Bank has for some time been actively supporting the development of rural banks and microfinance in Ghana under a Rural Financial Services Program, and has recently reviewed performance in this sector. This review confirmed that Ghana does not lack for number or diversity of rural and microfinance institutions—it has well over 300, operating in all parts of the country. The problem is that these institutions have not achieved strong financial performance or become truly commercial enterprises. They have remained unusually small by African standards, and are for the most part poorly managed.32 The rural banks have also tended to become vehicles for mobilizing the savings of the rural sector and then channeling them to salaried workers in urban areas rather than back into rural development—only 20 percent of credit extended by rural banks goes to the agricultural sector.

72. Among the factors that have been identified as contributing to weak performance in the rural and microfinance sector are:

  • the macroeconomic crowding out effects described above,

  • the prevalence of political interference, in part through subsidized and directed lending activities, including under a mandate that 20 percent of all District Assembly Common Funds be set aside for lending to micro and small enterprises at subcommercial interest rates (low repayment ratios on government sponsored loans have contaminated the rest of the portfolios of rural and microfinance institutions),

  • poor management capacity in the rural and microfinance institutions (low qualification and training standards) and weak accountability mechanisms;

  • excessively burdensome business registration requirements, which deter some rural and microfinance institutions from seeking formal status (only licensed institutions can avail themselves, for instance, of legal contract enforcement procedures);

  • weaknesses in Ghana’s system for registering property (movable and immovable) titles, which limits the use of collateral to facilitate lending activity;

  • the tendency of the Bank of Ghana to impose high minimum capital and reserve requirements as a substitute for close supervision (the latter would allow more discrimination between strong and weak peiformers); and

  • undercapitalization of some NBFIs, such as some savings and loan associations and building societies.

D. Summary and Conclusions

73. The Ghanaian financial sector has not yet achieved a sustained strong financial performance. The level of financial intermediation in the economy remains relatively modest. Banking system soundness indicators portray a mixed picture, as banks seem to be well capitalized and profitable, while nonperforrning loan ratios have reached high levels. Rural banks help extend banking system services beyond the major metropolitan areas, but their full potential remains to be realized.

74. The authorities have made significant progress in the last two years in the implementation of strengthened macroeconomic and financial sector reform policies. Economic developments are characterized by enhanced stability and sustainability. At the same time, important progress is being made in the review of the legal framework in the financial system; the Bank of Ghana Act has been passed already, and work on several other proposed bills is moving forward.

75. Nonetheless, additional efforts are still needed to help remove remaining bottlenecks to the expansion of credit to the private sector. Further measures are needed to consolidate improved supervision practices, promote the expansion of rural and microfinance institutions, facilitate lending to the private sector, and encourage the generation of long-term savings:

  • The provisions of the new Bank of Ghana Law and the proposed Banking Sector Bill go a long way toward ensuring a more efficient supervisory and regulatory environment To reap the full benefits of the new provisions, it would be important to provide adequate training and support to the supervisory authorities and the banks.

  • Further expansion of rural and microfinance institutions could be supported by further reform of the regulatory and supervisory framework. In particular, it would be useful to concentrate on streamlining entry and exit procedures, reinforcing capacity building programs for the rural and microfinance institutions and their supervisors, and ensuring adequate capitalization of all institutions.

  • To guarantee adequate levels of financing for the private sector, the demand for credit by the government and state-owned enterprises would need to be curtailed through prudent fiscal policy, on a sustained basis, combined with far-reaching reforms in the public enterprise sector (ranging from improved pricing regimes to divestiture).

  • As resources are freed up by reduced public sector borrowing, improved property rights and the establishment of credit information systems would help create the necessary incentives for the banks and other financial institutions to seek out viable lending opportunities in the private business sector.

  • The development of long-term finance depends on policies that encourage the provision of corporate credit, as well as those that enhance the supply of equity capital. Progress in this regard would need to be supported by an operational overhaul of SSNIT, strengthened regulation of securities dealers to increase confidence in the stock market, and divestiture of government shareholdings to deepen the market.

Appendix 1. Ghana—FSAP Assessments and Follow-Up

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Sources: “Ghana - Financial System Stability Assessment” (SM/01/177); and aide-memoire from World Bank Implementation Support Mission, March 2002.