The Ministry of Finance has approved the business plan for creating of a domestic credit rating agency as key market regulators emerged as shareholders with the Ghana Stock Exchange (GSE) being the majority shareholder.
Meanwhile, key entities have already accepted the proposal and working to get the agency established. The entities are the National Insurance Commission, the National Pensions Regulatory Authority and the Ghana Stock Exchange.
Augustine Simons, the Head of Fixed Income Market at the Ghana Stock Exchange, explained that the domestic credit rating agency is very critical to the promotion of investments on the capital market.
The Head of Fixed Income Market at the Ghana Stock Exchange added that the move, which is backed by the World Bank, will improve credibility of corporate bond issuers as well as businesses that participate on the GSE.
The domestic rating agency is expected to rank bonds according to their value in order to bring some confidence and comfort to investors.
Giving an update of the work done so far, the Head of the Fixed Income Market noted that the three market regulators have accepted proposal to hold stake in the agency.
“Work is progressing steadily and I must say that the three agencies nominated as initial shareholders for the agency, thus, NIC and the GSE have all accepted and made commitments to the establishment.”
Augustine Simons
KPMG Picked to Support the Establishment of the Rating Agency
Mr. Augustine Simons disclosed that the leading accounting firm in the country- KPMG has been picked to be part of the process to ensure credible rating agency.
“The business plan developed by accounting and auditing Firm, KPMG, has been accepted by the ministry and they’re supporting it fully to ensure that it becomes successful.”
Augustine Simons
Mr. Augustine Simons, however, added that the requirement by the Securities and Exchange Commission is what could delay the process since it may request a foreign assistance.
Meanwhile, the Deputy Managing Director of the GSE, Abena Amoah, noted that the GSE will be using financial literacy programmes to increase the appetite for investments, among citizens.
In view of this, the Deputy Managing Director disclosed that the Ghana Stock Exchange (GSE) partnered the Young Investors Network (YIN) and other industry players to launch a bouquet of investment education programmes for the youth as part of its objective to increase awareness and to deepen financial literacy in the country.
Early this year, the GSE announced that it will establish a domestic credit rating agency for the capital market in Ghana by the middle of the year.
This development came at the time President Nana Addo Dankwa Akufo-Addo tackled international credit rating agencies during the African Union Summit in Ethiopia.
President Akufo-Addo indicated that the work of the rating agencies has affected the cost and access to capital markets for African countries, which resulted in the downgrading of many African countries, exacerbating even more their funding challenges.
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