Graphic Business/Stanbic Bank Breakfast Meeting…Protect investors against losses — Participants
The country needs strong regulations to protect investors against losses in the event of default, participants at the Graphic Business/Stanbic Bank Breakfast Meeting have observed.
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The safety net was needed to bolster the confidence of investors and regain their trust to resume investing, they said at the event to draw lessons and appreciate the implications of the Domestic Debt Exchange Programme (DDEP) that ended in January.
The participants, who included the Convenor of Pensioners Bondholders Association, Dr Adu Anane Antwi, a chartered accountant and former CEO of the National Pensions Regulatory Authority (NPRA), Dr Daniel Seddoh, the President of the Association of Industries, Dr Humphrey Ayim-Darke and the President of the Ghana Union of Traders Association (GUTA), Joseph Obeng, said strong regulations, safety buffers and a transparent market would help to repair the lost trust and motivate people to stop finding alternatives to investing.
They stated that regulators also needed to be more sensitive to the plight of investors by acting to protect them against losses during turbulence.
The participants were contributing to discussions at the quarterly breakfast meeting held on the theme: ‘DDEP: Lessons and Implications for How you Invest.’
Shaken confidence
The event followed the successful completion of the DDEP, which saw the government swap about GH¢87 billion of relatively short-dated bonds that had an average coupon rate of 19 per cent for long-dated instruments with yields averaging nine per cent.
The debt exchange, which was meant to bring the national debt to sustainable levels, shook the confidence of investors, leading to dire implications on savings and government financing.
The forum was, therefore, meant to solicit the views of experts on how to restore confidence, as well as maintain and grow the investment culture among the public, post-DDEP.
It was chaired by the Managing Director of the Ghana Stock Exchange (GSE), Abena Amoah and had the Director General of the Securities and Exchange Commission (SEC). Other panellists were
Rev. Daniel Ogbarmey Tetteh, Dr Seddoh, a Non-Executive Director of Databank MFund Limited, Kasapreko Company Limited and the Ghana Deposit Protection Corporation, and Prof. Festus Ebo Turkson, an Associate Professor of Economics at the University of Ghana, as the speakers.
Regulators failed
Making his contribution, Dr Antwi, who is also the convener of the Pensioners Bondholders Forum, said the apparent silence of the SEC and the NPRA during the DDEP had weakened the trust of investors in the regulatory environment.
“If you do not protect investors, you will not get any confidence, yet when this DDEP started, I did not see any regulator performing an investor protection role,” he said.
He also described the inability of some non-bank financial institutions to pay depositors their funds as a blot to public trust and called on the Bank of Ghana to intervene to address the challenge.
Impact on businesses
The president of the AGI said the lack of clear sanctions, naming and shaming of participants in the capital market was concerning.
“It makes a lot of difference to build back our confidence,” he said.
His counterpart at the GUTA said traders like him risked engaging in overtrading – doing more business than the market or economy can support – if the trust issues were not dealt with for investments to resume.
Dr Seddoh, who said he is a student of life, also stated that “regulators do not protect customers and they must be told in the face to up their game.”
He called for a safety net similar to the depositors protection scheme in the banking sector as a fallback mechanism for investors in times of losses.