Our Financial System is Relatively Strong Following Reforms Carried Out in The Last Three Years – Dr. Ernest Addison.

The Governor of the Bank of Ghana, Dr. Ernest Addison has stated that Ghana’s financial system is relatively strong following reforms carried out in the last three years even though the economic outlook remains unclear.

According to him, the financial system is very well “positioned to continue to play a key role in supporting economic recovery going forward, and helping to promote financial inclusion and in particular to reduce the gender gap”.

He said this whilst giving the key note address at a webinar co-hosted by the Alliance for Financial Inclusion (AFI) and Bank of Ghana (BOG) on Integrating Gender Considerations into Covid-19 Policy Solutions in Accra on Monday September 14, 2020.

Dr. Addison said, “the webinar provides us a rare opportunity as policy makers, regulators, and other key stakeholders, to take stock of how our responses to the ongoing pandemic have either helped to close or worsen the gender gap”.

Dr. Addison stated that, “to reduce the burden of the pandemic on Ghana’s economy and in particular on small businesses and low income households, the Government and Bank of Ghana instituted certain measures.

“The Government’s support package included a small loan facility to MSMEs to the tune of Ghc 600 million (appx US$ 100 million), a Ghc 100 billion (appx US$ 18 billion) CARES program to expedite economic recovery, and the absorption of water and electricity bills for a few months”.

These measures, according to him, “have released a significant amount of liquidity to banks and SDIs which they have passed on to their customers in the form of an interest loan reduction averaging 200 basis points, loan repayment moratoriums of three to twelve months, and new loans to businesses in sectors that are at the forefront of the fight against the pandemic”. 

He further explained that “the Bank of Ghana’s measures recognized the key role of smaller financial institutions in extending access to financial services to small businesses and low-income households, several of whom had lost their businesses or jobs, making these financial institutions vulnerable given the heightened credit risk they bore.

“These measures have helped somewhat to reduce the burden on these institutions and their clients many of whom are female and young entrepreneurs. We have also seen a significant increase in the use of digital financial services during this pandemic, thanks to some of the measures we instituted”.

He added that, “the Government has also resorted to the use digital means of cash transfers to women and other groups under the Livelihood Empowerment Against Poverty program using the biometric e-switch card and mobile money interoperability platform. The increasing use of digital financial services help to accelerate the rate of financial inclusion, and to close the gender gap in access to finance”.

The recent launch by the Ghana Government of the National Financial Inclusion and Development Strategy, the Digital Financial Services Strategy, and the Cash-Lite Policy, according to him, “is intended to improve access to financial services from 58% in 2015 to 85% by 2023 through increased digital financial services that will help promote economic empowerment of the poor and marginalized”.

Dr. Addison assured his audience at the webinar that “as one of the implementing agencies under these policy initiatives, the Bank of Ghana will continue to use its policy and regulatory tools to promote safety and soundness of banks and SDIs and digital financial services to the benefit of all economic actors”.

The BOG Governor concluded by saying that “the Bank of Ghana remains committed to delivering on our commitments under AFI’s Maya Declaration, Denarau Action Plan, and Kigali Statement, and in keeping with our role as an AFI Gender Inclusion Ambassador, we will continue to make progress on promoting a gender-inclusive financial services ecosystem, and promoting sustainable finance”.