President Nana Addo Dankwa Akufo-Addo has assured the country that his government will do everything within its ability to bring about the recovery of the economy from the impact of the deadly pandemic, urging the private sector to be at the forefront of the revival mission.
In a speech delivered on his behalf by Finance Minister Ken Ofori-Atta at this year’s Ghana Economic Forum in Accra which was themed: ‘Resetting the Economy Beyond COVID-19; Building Economic Resilience and Self-Sufficiency’, the President said government has already rolled out programmes in the budget to help businesses get back on their feet to overcome the impact of the virus as quickly as possible.
Some of the programmes, he said, include the GH¢100 billion GhanaCARES fund which is expected to be used to support businesses of all sizes to revive their operations.
“We have put in place a number of detailed measures to support enterprises of all kinds to emerge from this unprecedented quagmire so that they can re-employ those that they laid off and even employ more to contribute to the economic growth that we all want.
Ours is to engender economic freedom to make us more productive. Our goal is to ensure social mobility and social justice in our development. The GH¢100 billion Obaatanpa GhanaCARES programme will ensure that micro, small, medium and large enterprises will be catered for,” he said.
He further emphasised on the importance of private sector engagement and collaboration, especially with the operationalisation of the Africa Continental Free Trade Area (AfCFTA) agreement, adding government is ready to support enterprises with the help they need to take advantage of the trade deal.
“We in Ghana cannot afford to let this window of opportunity slip. We expect that the private sector, facilitated and actively supported by government, will be at the forefront of trying to take advantage of the vast opportunity created by the AfCFTA. We are determined to bring prosperity to our people by working closely with the private sector.
It is the private sector that can create the needed job opportunities for the people of our country and I am confident that the Ghanaian private sector will rise to the challenge. Government on its part, will continue to build an enabling environment to provide the private sector with the needed catalyst to operate profitably grow and remain globally competitive,” he said.
Building resilient financial institutions
Panelists who spoke on the theme: ‘Building resilient financial institutions to mitigate the impact of COVID-19’ agreed there is a symbiotic relationship between macroeconomic stability and the resilience of financial institutions.
Commenting on the topic, Director of Research Department at the Bank of Ghana, Phillip Abradu-Otoo, said the Bank of Ghana – regulator of the banking sector – is very keen on ensuring that the industry is strong enough to withstand the impact of the pandemic and any external shocks which may come in future.
To ensure this, he said, the bank introduced a raft of measures which include reduction of the Primary Reserve Requirement from 10 percent to 8 percent to provide more liquidity to banks and SDIs; and reduction of the Capital Conservation Buffer (CCB) for banks from 3 percent to 1.5 percent.
Other measures include reduction of provisions for loans in the “Other Loans Especially Mentioned” (OLEM) category from 10 percent to 5 percent for all banks and SDIs as a policy response to loans that may experience difficulty in repayments due to slowdown in economic activity; and Loan repayments that are past due for Microfinance Institutions for up to 30 days shall be considered as “Current” as is the case for all other SDIs.
Also commenting on the theme, Group CEO of Hollard Ghana, Parience Akyianu, called on insurance companies to take full advantage of the opportunities the pandemic has brought to churn out new products that will attract the public and help grow the industry.
“I think this global pandemic has taught us lessons as businesses and individuals to review our activities and know what we should stop doing; what we should start doing; and what we should continue to do to not just bounce back but actually to become better when this is over. So for me, resilience goes beyond just resisting the shock and then staying the same but becoming stronger and emerging stronger in the face of challenges.
Specific to the insurance industry, I think we need to take full advantage of this situation to review our processes, our policies and our platforms and to make us not just more efficient, but to make us more relevant. Resilience is not the typical bouncing back and remaining the same but emerging stronger when all this is over,” she said.
Managing Director of Fidelity Bank, Julian Kingsley Opuni, said a conducive environment is needed for a resilient financial sector. “We need to create an enabling environment for the financial sector to have a direct impact on the real sector of the economy and remove what are viewed as impediments which make it slightly unattractive for financial institutions to do what they are supposed to do with regards to the recovery of the economy.
I am talking about creating the infrastructure that enables banks to lend comfortably; formalising the digital discussion in a bit more detail; credit bureau data etc, all have positive impact in creating a resilient financial sector,” he said.
Also a discussant on the topic was the CEO of Ghana Association of Bankers, John Awuah, who urged banks to set stricter requirements for themselves than what is required by the regulator so that they can accommodate any external shock which may come.
“Resilience means staying strong, staying focused, and in the sense of financial institutions and banks, staying with your regulator. When the regulator set a certain requirement, the question that players need to ask is how can they set stricter requirements. So that when there is a shock, they can withstand the damage,” he said.
Then, professor at the University of Ghana Business School, Prof. Godfred Bokpin, highlighted the importance of strong macroeconomic fundamentals in ensuring a resilient financial sector which will, in turn, be able to provide financing for government.
“You need a resilient financial system to support the overall economic strategy. Government can have a very beautiful strategy but the financing mechanism may not come direct from the central government and that is where you need a strong financial system. A strong and resilient economy is also good for the financial system as well. The financial sector is very critical to finance the growth strategy we are talking about. So we need a resilient financial sector to direct growth to the critical sectors of the economy,” he noted.
