Henry A Kofi Wampah: Making Ghana's financial system more efficient
Speech by Mr Henry A Kofi Wampah, Governor of the Bank of Ghana, at the launch of the
Collateral Registry Ghana, Accra, 8 May 2013.
* * *
Honourable Minister of Finance and Economic Planning,
Your Lordships (Justices of the Superior Courts), Your Excellency, the Swiss Ambassador,
Officials of the International Finance Corporation (IFC), Officials of the Swiss State
Secretariat for Economic Affairs (SECO),
Stakeholders of the Banking and Financial Sector of the Economy,
Executives of the Ghana Bar Association,
Government Officials,
Heads of Department and Staff of the Bank of Ghana
Invited Guests, Ladies and Gentlemen,
Good morning,
It is my greatest pleasure to be here at this important occasion for the launch the Collateral
Registry Ghana. What we are witnessing today is historic because this Registry is the first
movable and immovable asset Secured Transactions Registry in Africa and has been
established at an opportune time to address some fundamental challenges in our credit
system and the economy as a whole.
Mr. Chairman, the Ghanaian financial sector has gone through almost two decades of
restructuring and transformation. The Bank of Ghana, together with the appropriate
Government Agencies, has worked on a number of reform programmes to improve the
efficiency of the financial system.
Structural reforms have been undertaken in the capital market, money market, banking and
non-bank financial institutions and the settlement and payment systems. As a result of these,
we now have a robust and diversified financial system. There have also been extensive
reviews of the regulatory frameworks underpinning the financial sector, alongside enactment
of new laws to strengthen supervisory powers of financial sector regulators.
Mr. Chairman, deepening financial intermediation is one of the critical objectives of the Bank
of Ghana. Indeed, complaints from both borrowers and lenders about the lack of
transparency in credit access strengthened the resolve of the Central Bank to address the
issue. On one hand, borrowers complained about high interest rates, hidden charges,
nondisclosure of pertinent information and unfair denial of access to credit. Lenders on the other
hand, were worried about high default rates, difficulties of foreclosing on collateral through
the courts and the misapplication of funds by borrowers.
Thus, the passage of the Borrowers and Lenders Act, 2008 (Act773) paved the way to
address some of these challenges. The Act, among others, augments existing legislation
governing credit delivery and also seeks to promote a Secured Transactions Regime (STR)
with defined legal framework for credit, improved standards of disclosure, transparency and
speedy enforcement mechanisms. Mr. Chairman, an important organ to be established by
Act 773 to facilitate the achievement of these objectives was the Collateral Registry.
Soon after the passage of the Act in December 2008, the Bank, commenced activities
towards establishing a Collateral Registry. On the 1st of February 2010, the Bank
established a functional semi-automated Collateral Registry. In line with international best
practices, the Registry is to provide services such as:
•
Registration of charges and collaterals.
• Provision of avenues for lending institutions and the general public to conduct
searches on registered charges and collaterals.
• Assisting in speeding up realisation of collaterals upon default by a borrower.
•
Effecting discharges of registered charges and collaterals upon application by the
lender or the registrant and
•
Renewal of registration.
Following its establishment, the Bank moved a step further and collaborated with the
International Finance Corporation (IFC) which also seeks to promote access to credit in
Africa, to upgrade Ghana's Collateral Registry to an international standard Secured
Transactions Registry. The Project with IFC involved upgrading of the systems, processes
and the underlying legal and regulatory framework of the Ghana Collateral Registry to a
standard which would be comparable globally.
The Swiss State Secretariat for Economic Affairs [SECO] provided a grant to enable IFC with
local support from the Bank of Ghana, implement the project. This included a legal review
component which resulted in the issuance of rules for effective implementation of Act 773
and amendments to the Act. Also, a Web-based Registry system has been developed and
was rolled out, on 25th June 2012, ensuring full-automation and global access to the
services of the Registry.
In the area of capacity building and public awareness, the Project has undertaken several
training programs for financial institutions on the Web-based Collateral Registry System.
Also, seminars have been held for Lawyers, Law Firms, Commercial Court Judges and
respective Associations on the provisions of Act 773, and the operating rules of the Registry.
Mr. Chairman, let me say that within three years of operation, the Registry has performed
remarkably. By the end of March 2013, a total of 49,096 charges (secured loans) with
104,308 collaterals had been registered. Of these, 80.6 per cent were movable assets,
13.3 per cent were immovable assets and the rest consisted of both movable and immovable
types.
Almost 160 institutions (both local and foreign) have so far accessed the Registry for
registration. There have also been 14,608 searches conducted by various lending
institutions, law firms and the general public.
Since its inception, the Registry has attracted significant interest from sister Central Banks on
the continent. Delegations from several African countries have visited the Registry to study
the processes involved in its establishment and the Redesign Project.
Mr. Chairman, despite this impressive performance, there are a few challenges which the
Bank has to deal with to ensure that the full benefits of Secure Transactions Regime benefit
the economy. The most important of these which requires immediate policy focus is the
problem of duplication of registration and disjointed records associated with the absence
of harmonization between the Collateral Registry and other registries such as the
Company's Registry, the Lands Commission and the Driver and Vehicle Licensing
Authority (DVLA).
Mr. Chairman, Ladies and Gentlemen, it is appropriate for me at this juncture to
acknowledge the immense contributions of SECO and the IFC in the redesign of the
Collateral Registry and hope that the collaborative efforts will continue even after the
project has ended. I will express our appreciation to the lending institutions, Ghana Bar
Association, the Judiciary and other state agencies and stakeholders for their support in
this effort to upgrade Ghana Collateral Registry to an International Secured Transactions
Registry.
On its part The Bank of Ghana will continue to pursue policies aimed at achieving its
objective of price stability as well as ensuring orderliness in the foreign exchange
market.
Our inflation target for 2013 which is in line with the broader macroeconomic targets
(including the budget deficit of 9.0 per cent, real GDP growth of 8.0 per cent including oil
or 6.5 per cent excluding oil and a broadly stable exchange rate) remains at 9.0 per cent.
Recent trends in inflation
Inflation rose from 8.8 per cent at the end of 2012 to 10.4 per cent in March 2013. This
is consistent with the Bank's projections as the increases in February and to a lesser
extent in March reflected the effects of the recent upward adjustment in petroleum prices
in February as well as seasonality of food prices. We expect the upward trend to work itself
out by the end of the first half of the year and then decline towards the end year target.
Exchange rate developments
Recent trends in the exchange rate also reflect seasonality in the demand and supply of
forex in the foreign exchange market. Seasonally, demand is high around this time of
the year due to the settlement of import bills after the festivities (Christmas and Easter)
as well as demand from the corporate sector to meet dividend transfers, which is legal and
happens every year around this time. On the other hand however, supply is also low at
this time of the year as most of our forex receipts come during the second half of the
year. These pressures have occurred in the past and they are consistent with past trends.
The central bank will continue to ensure stability on both fronts - Increase supply of
forex on the market (as we are currently comfortable with the level of our reserves -
US$ 5.2 billion as of end April). The slight decline in the reserves from the end-December
2012 stock of US$ 5.4 billion is in line with seasonal trends. The country has currently
witnessed a decline in the terms of trade. This decline may however be compensated for
by increased oil production this year and the onset of gas production towards the end of
the year.
On the demand side, the Bank will continue with its tight monetary policy stance.
Policies implemented in the second quarter of last year will not be relaxed. These
should be able to restrict demand for forex. Currently, cedi assets continue to be
more attractive in terms of yields than forex assets and we intend to maintain that going
forward.
Meanwhile, the Bank will continue to apply the foreign exchange Act and regulations
vigorously. Any institution (including Banks) that fall foul of the laws will be sanctioned
appropriately. We intend to ensure that the cedi remains the only
legal tender in this
country. In this regard we need the co-operation of the Banks (forex dealers), the state
institutions and all other relevant institutions to achieve this.
The bank will assess the macroeconomic situation during its next MPC meeting
(May 20-22). Based on the outcome we will determine if there is the need for any
additional measures. As at now, we believe the measures are sufficient to deal with the
seasonalities.
Bond issue
There are initial discussions on the possibility of issuing a sovereign bond this year.
However, no firm decision has been taken on its size and purpose.
In the mean time, we wish to advise all banks to strengthen their research
departments so that their work can inform the comments of their executives on key
macroeconomic issues.
Finally, as we officially launch the Collateral Registry, I wish to assure all stakeholders that
the Bank will continue to work to improve credit access, which is important for economic
growth.
Ladies and gentlemen, I declare the Collateral Registry Ghana duly launched. Thank You
and God bless you all.