* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Investment Climate for Financial Sector Investment
Survey
Document related concepts
Systemic risk wikipedia , lookup
Syndicated loan wikipedia , lookup
Financial economics wikipedia , lookup
Private equity secondary market wikipedia , lookup
International investment agreement wikipedia , lookup
Pensions crisis wikipedia , lookup
Global financial system wikipedia , lookup
Stock trader wikipedia , lookup
Interbank lending market wikipedia , lookup
Shadow banking system wikipedia , lookup
Financialization wikipedia , lookup
Investment management wikipedia , lookup
Investment fund wikipedia , lookup
Investment banking wikipedia , lookup
Land banking wikipedia , lookup
History of investment banking in the United States wikipedia , lookup
Transcript
Investment Climate In The Ghanaian Financial Sector - Opportunities, Challenges & Way Forward Induction Ceremony of Association of Certified Chartered Economists Venue: UGBS, Legon Dr Kwabena Frimpong (Databank) 4/30/2017 Outline • Introduction • Global Market Trends • Investment Climate- Opportunities • Investment Climate –Challenges • Overview of Financial Market Landscape • Investment Options • Conclusions/Way Forward 4/30/2017 Introduction • Comment on Topic… • Not a seasoned economist like most you but matters of the economy should interest all… • Need to focus not merely on difficulties but also on opportunities • Financial Domain – Short & Long-term Markets. 4/30/2017 Current Global Market Trends • The worst of the global financial crisis seems to be over; but recovery will be gradual. • Germany, France, Japan have announced that they are out of the recession. OthersUK, Hong Kong & Thailand etc • Commodity markets are likely to recover strongly in 2010. 4/30/2017 Ghanaian Investment Climate: Opportunities • Regulatory and Judicial framework fairly strong. – – – – – Constitutional government Banking Act 2004 (Act 673) Foreign Exchange Act 2006 (Act 723) Securities Industry Law (PNDC Law 333) National Pension Law (Act 766) (3-tier pensions in Jan 2010) • Active stock Exchange). market (The Ghana Stock • The Ghana Investment Promotion Center serves as a “one-stop” shop for investor information. 4/30/2017 Ghanaian Investment Climate: opportunities • Sustained economic growth in the past two decades, with growth peaking at 7.3% in 2008. • Enhanced macroeconomic stability achieved between 2004 and 2006 mainly due to – Fiscal discipline – Currency stability • Generally sound macro-economic environment – – – – GDP growth was 7.3% in 2008 Inflation closed 2008 at 18.1% (July’09: 20.5%) 91-Day treasury bill closed 2008 at 24.2% (August’09: 25.9%) Cedi/Dollar YTD closed 2008 at 20.1% (August’09: 17.6%) • Oil discovery will impact medium-term growth and development. 4/30/2017 Ghanaian Investment Climate: opportunities Fig: 1 Ghana: Trend of Macroeconomic Indicators 40% 30% 20% 10% 0% -10% -20% -30% 2003 2004 2005 2006 2007 2008 2009 Cedi/Dollar (Dep./App.) Growth Rate Inflation Rate Prime Rate 91-Day Treasury Bill 4/30/2017 2010 2011 Ghanaian Investment Climate: Opportunities • BoG’s new minimum capital requirement for obtaining a Class 1 banking license (universal banking) at GH¢60 million. • Banks with local majority share ownership - a capitalization of at least GH¢ 25 million by the end of 2010 & GH¢60 million by 2012. • New requirement to position the banks to take advantage of the oil economy and to facilitate credit expansion for higher growth. 4/30/2017 Ghanaian Investment Climate: Opportunities Social: • Large educated labour force • Youthful population… • Large un-banked population (approx. 80%) 4/30/2017 Ghanaian Investment Climate: Challenges Relatively high inflation, interest rates & Currency depreciation- Disincentive to Foreign investor Majority of population outside banking sector/pension market Reversal of portfolio inflows Slower remittance inflows and FDI 4/30/2017 Ghanaian Investment Climate: Challenges • Inadequate Risk Mgt Expertise & Orientation (recent case of 5 Nigerian Banks should awaken us) • Lack of Expertise in Derivatives/Futures Trading • Low levels of financial literacy and participation in financial market: Bank account -18% (4million est) Mutual funds - 1% (300,000 est) Life insurance -3% (700,000 est) • Enforceability of contracts • The Labour market is beset with – – 4/30/2017 Get rich quick mentality Short-termism/limited commitment Investment Climate In The Ghanaian Financial Sector - Landscape 4/30/2017 Financial Market Landscape: Table 1: FIRMS Banks Rural Banks Non-bank Finan Forex Bureau NUMBER 28 128 44 273 Insurance Companies Re-Insurance Companies Insurance Brokers 21 2 35 GSE Listed Companies GSE Licensed Stockbrokers 35 17 Source: GIPC website & updated with figures from Databank Research 4/30/2017 Investment Options Both Portfolio and Direct Investments: • Stock, Pensions market • Government debt market • Commercial papers • Certificate of deposits • Mutual funds • Direct equity investment in industry 4/30/2017 Investment Options • Avg. ROI of banking sector (03-08):25% ; Insurance- 15%; Trading & Distribution- 21%; Agric -12% • Avg. stock market returns are competitive globally (37% over 12yrs) • Ann. Avg Returns for equity funds like Epack ( 47% as at Dec08) • Treasury market returns are competitive (Ann. Avg of 28% over 12yrs) 4/30/2017 Investment Options What Returns Can I Make? Comparative Returns ('96 -'08) 9000% 8000% 7000% 6000% 5000% 4000% 3000% 2000% 1000% 0% 8301% 2906% 2227% 739% Epack Share 91-Day Bill Fig. 3: Comparative Returns (Oct. 1996- Dec. 2008) 4/30/2017 1805% I Year Bond Dollar 860% Inflation Challenges • Lack of adequate knowledge/Information Asymmetry of financial market/Research Services • High Interest Rates/Inflation & Currency Instability • Lack of expertise in international transactions • Low income levels (can slow down mortgage market develop) 4/30/2017 Challenges • Bureaucracy – Dealing with Govt. Agencies (GIPC and Registrar General etc) • Limited disclosure of investment risks • Illiquidity of Stock market 4/30/2017 Conclusions • Enormous opportunities in Ghana’s economy – Country is well-endowed with mineral resources, political stability in addition to recent discovery of crude oil plus large un-banked population • Significant inroads in macroeconomic and political stability which could potentially propel development over the long-term. 4/30/2017 Conclusions • Challenges which could hinder the tapping of these opportunities. – Poorly coordinated policies and bureaucratic corruption – Inadequate Risk mgt expertise and orientation – Limited research information/ Difficulties of accessing information – Short-termism and get rich quick mentality – Volatility in Exchange rate and Inflation.. 4/30/2017 The Way Forward • Govt to assiduously work toward stability. – Reduce overall fiscal deficit to 9.4% in 2009 from 14.5% (24.2) in 2008 – Stabilize currency and slow down inflation • Quicken pace for Stock market automation • More listings on GSE to enhance liquidity • Quicken pace for Commodity futures markets 4/30/2017 The Way Forward • Emphasis on risk management skills in business education • GSE should offer professional courses on derivatives and futures • Increased financial literacy and education 4/30/2017 The Way Forward • Enormous opportunities exist in pensions market following passage of Pensions Act (766): Innovative pension product dev • Innovative products should developed for large un-banked population – vital effective implementation of monetary policies • Research Services – Consumer behaviour, Rich list, customized Industry Research, Customer Satisfaction Indices 4/30/2017 Thanks for your Audience & congratulations to all newlyinducted members of the ACCE! 4/30/2017