Capacity of local investors ranks among lowest in Africa … Barclays’ study reveals

The maiden edition of the Barclays Africa Group Financial Markets Index has ranked the capacity of local investors in the country among the lowest of 17 financial markets on the continent.

The survey, conducted in collaboration with Official Monetary and Financial Institutions Forum (OMFIF) and launched in Accra last week, cited high non-performing loans (NPL) ratio, weak insolvency framework, and low domestic investor capacity as areas that need to improve if the country is to improve the performance of local investors.

According to the survey, the relatively small size of local financial markets and illiquidity of their assets have created difficulties for the growth and development of local investors.

“Even though local investor assets have increased over the past decade, local financial markets have often not kept the pace,” the survey stated.

Ghana, despite scoring 12 out of a possible 100, the survey said, has made progress in growing its pension assets, possesses a strong export market share growth, has enforceable collateral positions, and netting and set-off provisions.

Overall performance

Ghana placed seventh in the index which ranked the maturity, openness and accessibility of 17 markets in Africa based on both qualitative and quantitative criteria.

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It focuses on fundamental pillars of financial market performance in the areas of market depth, access to foreign exchange, capacity of local investors, market transparency and regulations among others.

Speaking at the launch of the Index, Mrs. Patience Akyianu-Managing Director, Barclays Bank Ghana, said the index will be reviewed annually and be a medium for continuous engagement with key stakeholders.

“Over time, it will be easy to see the direct correlation of a market’s progress to the index with government/central bank’s implementation of developmental strategies from the index – Ghana included,” she said.

According to Mrs. Akyianu, insights gathered through vehicles like the index broaden the understanding of Ghana and the continent as a whole, and the needs of its varied market.

“This helps to play our part in promoting and supporting development of the continent’s financial markets; a clear example of our shared growth promise and commitment to creating shared value for our country, communities and businesses,” she added.

Insights

David Marsh, Managing Director of OMFIF – an independent think-tank for central banking, economic policy and public investment, said: “Liquidity, regulation, foreign exchange restrictions and policy choices are among the chief concerns for investors considering their African engagement.

“Our survey highlights the areas where specific countries need to make genuine advances to forge strong positions in the competition for sustainable investment,” Mr. Marsh said.

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In addition to statistical analysis, OMFIF gained additional insights by surveying 60 top executives from financial institutions operating across the 17 countries, including banks, investors, securities exchanges, regulators, audit and accounting firms, and international financial and development institutions.

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