MINISTRY OF FINANCE
Financial sector pumps up the volume

Ghana’s financial sector has experienced remarkable growth since an economic slump in 2001 lead to a new banking act the following year aimed at ensuring fiscal discipline, stable exchange rates, improved financial inflows and reduced inflation. This was followed by the 2004 Banking Act, which strengthened regulation and supervision, significantly improving conditions for private institutions and leading to a mass migration of Nigerian banks next door while Ghanaian financial institutions such as Unique Trust started to hit the list of the country’s top performing companies.

Today, with its 22 banks, active stock exchange and vibrant insurance industry, Ghana’s financial services sector has the potential to be the catalyst for broader development in the country, and to establish Ghana as the imminent financial hub in West Africa. Recent initiatives include the setting up an offshore banking system, which the government undertook in a joint effort with Barclays last Septmeber.

The rise in credit to the private sector (it grew by 32.6% in 2006, leading to a 41% jump in the sector’s overall assets) is also furthering government objectives of stimulating SME growth. This has been supported by the Credit Reporting Act, which Minister of Finance and Economic Planning Kwadwo Baah-Wiredu says reduces risk for banks.

He adds, “We also have the micro finance and small loans centre which is being run by government, and the rural banks. Grants from government and donor agencies are channelled to these rural banks for on-lending to small enterprises, traders and farmers in the rural communities.”