Despite the negative impact of COVID-19 on global economies, some investment analysts in Ghana have disclosed that the situation helped bring back confidence in the investment market as more players switched to digital channels to invest their funds.
According to data from the Ghana Stock Exchange (GSE), investment in the Ghana Fixed Income Market almost doubled in the pandemic year of 2020 to GH¢108billion from the GH¢55billion recorded in 2019. As at May 24, 2021, the Ghana Fixed Income Market had traded GH¢88billion – almost 80 percent of the previous year’s record.
“Once the COVID hit – and also in the aftermath of financial sector reforms which changed perceptions of the way investors in Ghana look at investment, they moved away from risky assets. The bond market was ready for them. The confidence is coming back,” Managing Director of the GSE, Ekow Afedzie, said at the maiden Money Summit organised by the Business and Financial Times (B&FT) in Accra.
Mr. Afedzie was part of a panel comprising the CEO of Databank Group, Kojo Addae Mensah; CEO of Africa Sureties and Insurance Advisory Company Ltd., Solomon Lartey; as well as the CEO of GLICO Group, Edward Forkuo Kyei.
Mr. Afedzie revealed that the GSE had been preparing for the past 14 years to automate its activities to make it easier for people to invest without engaging in a lot of paperwork. This, he explained, created an atmosphere that encouraged investors to look within and still invest in the country, despite the global risks posed by the pandemic.
He stated for example that MTN and some other companies in the capital market saw their share prices increase in the period of the pandemic, due to the positive gains in the technology sector. “We saw the index in the equity market going down in 2018, 2019, 2020. Fortunately, the confidence is coming back. The equity market is now giving out positive returns. The index moved up in April to 31 percent positive,” he said.
Focusing the positives
On his part, the CEO of Databank Group, Kojo Addae-Mensah, stressed the need to focus on technology to leverage the gains realised by the financial sector clean-up. He was of the view that even though confidence in the investment market dipped in 2019 due to the financial sector clean-up, hope in the system is gradually rising as technology is deployed to assure customers of their funds safety.
“I can tell you for a fact that confidence in the sector is coming back. The regulator did a good job, and the pandemic also came to reinforce the need for technology to drive digital growth. I prefer to see the positive side of the pandemic”
Mr. Addae-Mensah stated that Fund Management Companies can increase the trust clients have in their operations if they always make funds available for their customers upon request to withdraw. “I always tell players in the market including competition that when somebody gives you money on Friday and want to withdrawal it on Monday, give it to them. Don’t try to talk the client out of it because they become suspicious.”
Insurance penetration in Ghana_
Speaking on the need to broaden the definition of insurance penetration in Ghana, the CEO of Africa Sureties and Insurance Advisory Company Ltd., Solomon Lartey said a careful look at the sector shows a 30 percent penetration in Ghana – unlike the asserted 2 percent in the public domain.
He stated that focusing on a narrow definition of the insurance industry takes away the significant contribution it makes to the financial sector. “A broad definition will include pensions, in this case the Social Security and National Insurance Trust (SSNIT) and many other areas in the new insurance act,” he said.
Mr. Lartey called for more education to increase insurance coverage in Ghana, since it will help create a pool of funds that can be invested in other critical sectors of the economy. “Insurance is not an investment. It protects an investment and the various components of an investment. We need more education to teach the public the importance of insurance.”