Regulators’ decisions – or lack thereof – will be the defining factor shaping the financial services sector this year and for the foreseeable future, industry leaders said at a gathering in Accra.
Speaking during a panel discussion at the 3rd Annual Forecast Dinner and Charter Recognition Ceremony organised by the local arm of the Chartered Financial Analysts (CFA) Society Ghana, senior executives highlighted how regulatory oversight has become the crucial determinant of the sector’s development – in some instances superseding traditional market forces.
Under the theme ‘Current State of our Industry – Pensions, Insurance, Mutual Funds and Asset Classes’, they argued that regulatory responsiveness and macroeconomic stability will determine the sector’s growth trajectory.
The panel highlighted how these factors intersect with challenges in offshore investments, risk management and the evolving demands of digital transformation across the financial services terrain.
Kofi Kodua Sarpong, Chief Executive-Sarpong Capital, highlighted the challenges fund managers face when attempting to invest offshore. He said while local fund managers are eager to explore international investment opportunities, they face significant regulatory hurdles.
“The hassle for fund managers to invest offshore is immense; it’s not for a lack of trying, the regulatory environment is prohibitive,” he said.
Currently, private fund managers are allowed to invest up to 5 percent of their funds offshore.
Mr. Sarpong argued that regulators’ strict stance on offshore investments needs reassessment, particularly because many offshore markets are transparent, yield returns in foreign currency and can contribute positively to the domestic investment space.
He called for regulatory reforms that balance risk mitigation with investment flexibility, allowing domestic fund managers to capitalise on global financial markets, stating: “The risk-off position that our regulators take needs to be reexamined”.
In line with global investment trends, he predicted a gradual shift toward cross-asset strategies, including commodities and alternative asset classes, beyond traditional debt and equity investments.
The domestic stock market fared well in 2024, with the Ghana Stock Exchange Composite Index surging 56.17 percent – its strongest performance since 2013.
However, U.S. equities also posted robust gains, led by technology shares. The S&P 500 rose 23 percent while the tech-heavy Nasdaq and Nasdaq 100 gained 29 percent and 25 percent respectively.
Meanwhile, the Federal Reserve maintained its key interest rate at 4.25 percent to 4.5 percent in its first meeting of 2025, following a cumulative one percentage point reduction in 2024.
With inflation still running above the central bank’s 2 percent target, policymakers have signalled a cautious approach to further rate cuts – indicating they will wait for convincing evidence from inflation and employment data before easing monetary policy further. Consequently, interest in U.S. bonds are likely to remain elevated.
On her part, Daisy Ofoliwaa Adjei-Boadi, Chief Finance Officer at Metropolitan Insurance, identified inflation and exchange rates as the most critical macroeconomic factors for 2025, particularly in relation to disposable income and financial product uptake.
She pointed out that inflationary pressures and currency depreciation directly affect household incomes, leading to a decline in demand for financial products such as insurance.
“Many Ghanaian consumers still perceive insurance as discretionary, making it one of the first expenses to be cut when economic conditions worsen,” she pointed out.
Additionally, the CFO mentioned the importance of Environmental, Social and Governance (ESG) factors in investment decision-making. While many discussions around ESG focus heavily on environmental concerns, the governance aspect remains the most critical factor for investors in Ghana.
She cautioned against greenwashing, a practice wherein companies claim they adhere to ESG principles without actually implementing meaningful policies. To avoid this, firms must develop context-specific ESG strategies that align with both ethical standards and long-term business sustainability.
“While ESG initiatives may involve high initial costs, the long-term benefits significantly outweigh expenses,” she added.
Matthew Mani, Group Chief Operating Officer (COO), Axis Pensions Trust, said government fiscal discipline and compliance with International Monetary Fund (IMF) conditions will be pivotal in shaping investor confidence, exchange rate stability and interest rates this year.
He also expressed concern over the slow responsiveness of regulators in the investment industry. While market participants often identify opportunities early, regulatory decision-making can be delayed by bureaucratic processes – leading to missed opportunities.
“We understand the constraints as guardians; but very often by the time regulators are ready to act, opportunities have been lost. While market participants can often anticipate emerging trends, regulators are constrained by consensus-driven decision-making,” he explained.
Mr. Mani called for a more proactive, anticipatory regulatory approach – particularly in emerging sectors such as Artificial Intelligence (AI) and new energy markets – to ensure Ghana remains competitive in the evolving global investment sphere.
