Akufo-Addo to make Accra financial center in sub-Saharan Africa
The government is seeking to make Accra a financial services center in sub-Saharan Africa (SSA) that will serve as a converging point for regional giants in the financial intermediation space.
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The dream is at the heart of President Nana Addo Dankwah Akufo-Addo’s presidency and will be executed within his tenure in office, the Finance Minister, Mr Ken Ofori-Atta, said in Accra.
It involves creating the right macroeconomic environment, using incentives to attract regional heavy weights in banking into the country and building four to five big domestic banks that will be strong enough to rub shoulders with their international peers, the minister said at the annual lunch-on and general meeting of the Ghana Association of Bankers (GAB) on August 11.
By so doing, the minister said the country will be taking advantage of “an opening for a financial services center in SSA, north of South Africa,” that is yet to be tapped.
“The issue of Ghana becoming a financial services center is key to what the president wants to achieve because without a robust financial system, certainly issues of industrialisation and Ghana as a hub becomes problematic,” the minister told a gathering of all the 36 bank executives in Accra.
“The challenge then is how do you engineer all the 33 plus three banks and banking licences that we have and manage to drive a place that is a magnet for financial services so that we can make the type of progress that we need to have,” he said.
Although a daunting task, Mr Ofori-Atta said Ghana’s location and stable sociopolitical environment made the capital a conducive place for such a center and thus charged on bankers to support the government in making the dream a reality.
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Beyond supporting the government’s industrialisation drive, the minister intimated that Accra as a financial services center will cut out the situation where Ghana’s foreign reserves are managed by “outsiders” only for the country to go out and borrow those same monies through Eurobonds.
Reversing that trend, he notes required that the country built strong banks or convinced counterpart banks from neigbouring Nigeria to relocate their head offices to Ghana, where they can possibly manage some of the country’s sovereign reserves.
Conditions for hub status
While optimistic that Ghana Accra as a hub of financial services in SSA is possible, Mr Ofori-Atta said it required that domestic banks are properly positioned to play a significant role in that regard.
He mentioned recapitalisation and increased regulation as some of the strategies that the government, through the Bank of Ghana will be using to set the stage for making Accra a financial services hub.
The new capital, which he said will be likely be substantial, will seek to “strengthen the banking infrastructure and cut down on certain externalities and behaviour that are occurring because of some form of competition.”
He further charged banks to stop “tinkering on the edges and be bold about the future.”
“My suspicion is that there is an opening for a financial services center in sub-Saharan, north of South Africa, and we have every opportunity to do that,” he said.
He also hinted of “some sacrifices” in the banking sector that could lead to bank consolidations similar to what occurred in Nigeria. In Nigeria, a drastic recapitalisation around 2012 saw 80 banks shrink to 12 banks and the injection of some US$4 billion into the banking sector.
The historic bank consolidation, resulting from the recapitalisation, gave birth to the export of banking services in that country, where a chuck of Nigerian’s big names in banking are now pitching camps in Ghana and the sub-region.
Bankers welcome idea
The President of the Association of Bankers, Mr Alhassan Andani, welcomed the ministry’s dream as an important one that could serve as a stepping stone to achieving bigger progress.
With a financial services center, he said the country will be leveraging its stable governance and strong respect for rule of law to attract big financial service providers into the country.
Beyond the sociopolitical environment, Mr Andani said a hub concept required that players in the industry have the ability to abide by good financial governance, respect the standards of international financial rules and be prepared to play a complimentary role to the global giants that will be setting up.
“A financial services center is about payment and settlements and you must have the infrastructure to do that,” he said.