Abena Amoah, Managing Director of Ghana Stock Exchange ( GSE) has advised investors in Ghana against investment in government bonds with the introduction of government’s Domestic Debt Exchange Programme, adding that more attention be given investing in the private sector.
According to the GSE Managing Director, the Domestic Debt Exchange Programme (DDEP) presents a silver lining that the country must grab with both hands and fly with it. The DDEP would reset the interest rate regime of the country and also help free up capital for investment in the private sector, she added.
The DDEP, she further opined provides lessons to financial institutions that they cannot continue to invest in government bonds.
“We cannot continue to invest in government bonds, we have to look for additional returns by investing in the private sector.”
Abena Amoah
These comments from Ms. Amoah came while she was speaking at the Graphic Business/Stanbic Bank Breakfast meeting themed: ‘Domestic Debt Exchange: Lessons and Implications For How You Invest.
On his part, the Executive Director of Riscovery Insurance Brokerage, Dr. Daniel Seddoh, has taken on regulators of financial institutions for leaving customers high and dry when government initiated its Domestic Debt Exchange Programme.
The Executive Director of Riscovery Insurance Brokerage averred that regulators need to “up their game” in protecting customers, since they provide the money used for investment.
“When you are speaking from the customers’ perspective, the regulators really do not protect customers and the regulators need to be told in the face that they need to up their game. It is the customers that come with the money that is invested and it is not the government that needs to be protected.”
Dr. Dan Seddoh
Dr. Seddoh, moreover indicated that the government is “too big” to protect, thus, regulators siding with government will only “create more problems”.
“We need to get the regulators to appreciate the fact that they need the investors so they should work with the investors rather than the government.”
Dr. Dan Seddoh
The Chartered Accountant and Pensions expert explained that, to restore investor confidence in the capital market, players in the sector must lead the way and “behave properly”.
“We are still a developing country and not most of us are educated, and just as when I am sick I go to the hospital and expect the doctor to do the right thing, investors also expect players in the capital market to do the right thing.”
Dr. Dan Seddoh
Financial actors urged to be transparent in dealing with investors
Dr. Seddoh further called on players in the financial market to be transparent in their dealings with investors to help build back confidence in the sector.
He said it was prudent for the country to develop “a proper” capital market based on trust with “the right thinking people” and not greedy individuals who would take advantage of ignorant people.
The speakers at the thought leadership event included the Director General of the Securities and Exchange Commission (SEC), Rev. Daniel Ogbarmey Tetteh, who spoke on the role of investments in the national development agenda and its benefit to investors; an Associate Professor of Economics, Prof. Festus Ebo Turkson, whose address was on the triggers of the DDEP: lessons and strategies to prevent a repeat; and a chartered accountant and former Chief Executive Officer of the National Pensions Regulatory Authority (NPRA), Dr. Daniel Seddoh, who explored the future of investments and how to regain public trust.
The event took place at the Labadi Beach Hotel with the Managing Director of the Ghana Stock Exchange (GSE), Abena Amoah, as the Chairperson.
The quarterly initiative by the two institutions was organized to explore the lessons and implications of the DDEP – a prerequisite to accessing assistance from the International Monetary Fund (IMF) to resuscitate the economy, that shook the confidence of investors.
The DDEP, the records show, resulted in the swapping of about GH¢87 billion short-dated bonds that had an average coupon rate of 19 per cent for long-dated ones with yields averaging nine per cent.
