Managing Director of Stanbic Investments Management Services (SIMS), Kwabena Boamah has urged banks to drive the focus of their clients towards investments in private equity, real estate investment trusts, money market investments, and other investment options aside investing in government bonds.

Speaking at the Graphic Business/Stanbic Breakfast Meeting held yesterday, Tuesday, March 21, 2023, Managing Director of Stanbic Investments Management Services (SIMS), Kwabena Boamah said the ongoing DDEP has proved that government securities are not entirely secured, adding that:

“Now it calls for diversification. And that’s very critical. We can’t afford to over-invest or over-rely on investment in the government space, in terms of the government bonds . So along the investment industry, there’s a lot of conversation around diversification; what alternative conversation can we put our client funds in beyond Government of Ghana? We are looking at Private Equity, we’re looking at Real Estate Investment Trust, we are looking at Money Market investments, and then other investment options that we can put clients funds in.”
Kwabena Boamah

Participants in the Graphic Business/Stanbic Bank Breakfast Meeting emphasized on the need for the banking sector to diversify their investments in such a time as this that the country has found itself in.

According to them, banks cannot continue to solely rely on government bonds. This, they added will also help banks to be able to spread risk in the financial ecosystem and help avert losses.

The Graphic Business/Stanbic Bank Breakfast Meeting was organized under the theme: ‘Domestic Debt Exchange Programme: Lessons and Implications for How You Invest‘. Speakers at the event highlighted the need to learn from circumstances that led to the Domestic Debt Exchange Programme (DDEP).

Director-General of the Securities and Exchange Commission (SEC), Rev. Daniel Ogbame Tetteh, while speaking at the event, called for more financial education to properly educate investors on the real risks associated with various investment schemes.

“We need to have the understanding that what is happening within the macro-economic environment can impact investment. There are some shocks that can come; some may be self-inflicted, some may be external. But either way, I think the cardinal point is that, what happens within the broad macroeconomic environment will impact investment.

Rev. Daniel Ogbarmey Tetteh picture 1 — Rev. Daniel Ogbame-Tetteh, Director-General, SEC

“So the question is; how do you understand the shocks? Are there some things you can do? Because I hear a lot of talk; safety, safety, safety. But the question is there are risks out there. [Other speakers] alluded to the fact that there is always the element of risk. So the question comes down to how do you position yourself to protect or minimize the impact?”
Rev. Ogbame-Tetteh

Meanwhile, Economist, Prof. Ebo Turkson, on his part, underscored the need for government to move away from implementing populace political initiatives that do not grow the economy and ensure policy continuity.

“If you don’t clean up the mess in your economy, that market will punish you. What we witnessed in the middle part of 2021-2022 was as a result of that. Now, because, the way the money flies in, the money will fly out if investors are not too confident in their economy.

Prof. Ebo Turkson, Economist

“…If you look at ever since Covid hit, we’ve had the situation where we’ve not kept to our fiscal consolidation efforts, and therefore, once our debts to this situation went above 70%, investors began to get concerned about our ability to pay.”
Prof. Ebo Turkson

Government urged to avoid using expensive debts to pay emoluments

Abena Amoah, Managing Director of the Ghana Stock Exchange (GSE), also, while speaking during the event advised government against competing with the private sector for loans to pay salaries and service its debts, while being emphatic on the need for government to avoid using expensive debts to pay emoluments.

“It is critical that if we are going to rebuild trust and confidence in our economy, government, private institutions and to the largest extent, the individual – the tax payer. We must conduct ourselves in a transparent and accountable manner, to build trust with other stakeholders.
Abena Amoah, Managing Director, GSE
“Fiscal discipline- this is necessary for sustainable economic growth. Government must prioritize economic and social investments and must avoid using expensive debts to pay emoluments, and service more debts. And the emoluments go to 700,000 public servants , and today, we spend more than 40% of revenues, paying the emoluments and with the rest, paying public debts.”
Abena Amoah