Panelists at the second edition of The Money Summit have acknowledged the robustness of the country’s current regulatory regime for equity and capital market investments, albeit admitting that there are still some milestones to be attained.
The revocation of licenses of some 53 fund management companies by the Securities and Exchange Commission (SEC) in 2019 has significantly impacted investor confidence, with SEC stating that the companies failed to return clients’ funds which remained locked up, a contravention of the investment rules.
But the Deputy DG – Legal, SEC, Mrs. Deborah Agyemfra, speaking at the event on the theme: ‘Enhancing Investor Confidence, Critical Vehicle To Driving Economic Growth’, stated that the recapitalisation of fund managers and the institution of better regulatory regime to protect investors have rebounded investor confidence, enabling fund managers to better manage funds.
“The current regulatory regime is stronger than before, and it is advisable to put liquid funds back in the capital market as there is enormous sanity under better regulatory regime with guidelines that are effective,” she said.
Shedding more light, she said investors want systems which have laws to protect them where things are not done haphazardly, adding: “The Securities Act 2016, protects investors through a fair and transparent manner. This regulation applies to everyone in the space, while ensuring confidence”.
A ten-year capital market masterplan according to the SEC, has been developed to enable investors understand their operational space, with key guidelines on market expectations and operations.
Mrs. Agyemfra disclosed that despite the successes chalked, challenges of low financial literacy among the general public still persists, offering SEC a constant responsibility to always create awareness and educate the populace.
“The SEC gives guidelines on illegal products and investments – which are misleading – to protect the public. We do this constantly,” she said.
Equally, a capital market consultant at the Stock Exchange (GSE), David Tetteh, sad the 40 percent performance of stock exchange equities is an assurance to investors to be confident that the market is back.
“Investors should not just keep their money in liquid assets but should be bold to invest in capital market with an assurance of protection,” he said.
He however said the participation of locals in the capital market is under 5 percent – a situation that calls for more local people to participate in the capital market.
Mr. Tetteh intimated that the citing of available pool of funds heading back to government is not the way to grow the economy.
He said pension funds’ investment in government securities is close to 90 percent of the money they are managing, making it difficult for companies to access long-term debt and equity to grow businesses.
The GSE, Mr. Tetteh emphasised, has been at the forefront of influencing policy, with a current initiative being an engagement with the National Pensions Regulatory Authority on a draft of new regulations asking fund managers to set a floor with a minimum percentage of investment that is going to variable income securities.
This, he added, was meant to enable fund managers to allocate part of the funds they manage into the real economy.
Head of Public Sector at FBN Bank, Hayford Danso, said Ghana currently has all the major indicators to attract confidence from investors, including value efficiency, market motive and political stability.
“The value of efficiency includes the resource seeking motive of the investor which comprises skilled labour, education, road network, electricity, among others. Market motive includes the market size; and the fact that more and more global companies are siting automobile companies here is a good thing. Ghana’s political stability is three decades and that is a strong bargaining power for bringing investment here,” he said
The FBN Bank, he disclosed, is thriving with the above indicators through positioning itself to support government to drive the public good through a strong manufacturing and construction desk.
“We’ve pushed a lot of money to construction of roads, and investors are attracted to these things where they can get access to financial facilities to grow their investments,” he said.
CEO of the Ghana Investment Promotion Centre (GIPC), Yofi Grant, speaking at the Summit, maintained that Ghana remains one of the most attractive business environments in West Africa, consolidating its position as a beacon of political stability – a parameter which ranks high among global investors.
He said the economy has shown some resilience and was growing at an average of 7 percent, one of the highest in the world prior to the COVID-19 pandemic.
“The pandemic has eroded over US$12trillion of wealth globally in the first year of covid in 2020. Despite that, the country recorded an FDI of US$2.64billion in 2020 at the height of the pandemic – better than the US$1.4billion in 2021,” he said.
Indeed, Ghana was one out of about 27 countries which posted positive growth of 0.6 percent of GDP during the pandemic, with Mr. Grant describing the feat as enviable.
He said one of GIPC’s aim is to sell confidence and that is critical to attracting investors, adding that government’s ‘Building Back Better’ agenda hinges on agriculture, energy, housing, education to steer the country during the current global crisis.