ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
Next, the Bank facilitated the passage of the now-repealed Payment Systems Act 2003 (Act 662), which established the Ghana Interbank Payment and Settlement Systems (GHIPSS) that ushered in the retail electronic payment community.
Since then, Madam Chairperson, there ha ve been significant changes to the payment system landscape, with the introduction of the National Switch, Cheque Codeline Clearing (CCC) and Automated Clearing House (GACH) systems, Biometric Smart Card System, the e-zwich, Ghana Instant Pay (GIP), and the passage of the Payment Systems and Services Act 2019 (Act 987), which paved way for the non-banking sector, including financial technology firms , to operate in the payment ecosystem.
The mobile money sector has witnessed tremendous growth and continues to support financial inclusion due to its convenience in terms of facilitating funds transfer, utility and bills payments, as well as remittance transfers.
The Bank’s strategy for payment systems development over the years is to foster competition among industry players with the view to drive innovation, competition, and provide consumers with choice at lower cost of transactions.
An example of this is the Bank’s bold step to bring financial technology firms (FinTechs) under its regulatory purview.
This singular policy decision has led to expansion in digital financial services and helped bring the unbanked into the formal financial system.
Distinguished Ladies and Gentlemen, notwithstanding the maturity of the national payment system, however, transaction s between Ghana and other African countries may have to go first to a third country, which is not likely to be based on the African continent .
These movement of funds and settlement processes involving banks that are outside Af rica raises the t ransaction costs for cross-border payments.
For instance, data from Society for Worldwide Interbank Financial Telecommunications (SWIFT) show that 48 percent of Africa settlement processes occur in countries outside Africa, and the U.S.
Dollar remains the dominant trade currency.
Crossborder payments are slow, can be expensive and opaque.
We find banks having to use correspondent relationships outside Africa to get funds from a payer to a payee on the continent.
This leads to high transaction costs for trade in Africa including transfer fees, bank charges and SWIFT charges.
Regional Payment System Initiatives 14.
Faced with such correspondent banking challenges and to ease intra-regional trade, African economies have pursued various regional integration initiatives to lower cross border payment costs .
These include initiatives to introduce either a common currency or a common payment platform to foster intra-regional trades.
Starting off in 2004, the West African Economic and Monetary Union (WAEMU)/Union Economique et Monetaire Ouest Africaine (UEMOA) launched a regional gross settlement system.
The STAR -UEMOA connects direct participants through the SWIFT network or the private network of the BCEAO.
Participants in the system include financial institutions, the Central Depository, the WAEMU interbank electronic banking group (GIM -UEMOA) and the West African Development Bank (WADB/BOAD).
In the regional groupings, t he Southern African Development Community (SADC) region dominates Africa ’s regional payment systems in terms of transaction volumes.
The SADC integrated Regional Electronic Settlement System (SIRESS) , now SADC-RTGS, was developed in 2013 to facilitate funds transfers for cross border payments among SADC countries to promote trade within the region.
This process eliminate d the need for correspondent banks and lowered transaction costs.
Currently, a ll the sixteen (16) countries , except Comoros , have joined the SADC -RTGS.
The SADC Banking Association in collaboration with Bank serve Africa (Pty) , as part of the SADC payment integration roadmap , has also developed a low- value cross -border payment solution for the SADC region.
Participants within this platform include central banks and authorised banks and non -banks.
Since its inception in 2013, t he SADC-RTGS has processed 2.2 million transactions or R8.56billion (US $568 million) in total value of transactions as at September 2021.
Again in 2014, the East African Community Payment and Settlement System (EAPS) integration project was launched.
The overall objective of this project was to create a robust integrated regional wholesale and retail payment and settlement system to improve the efficiency of cross -border payments.
Transactions are carried out and settled in the EAC local currencies through their linked Real Time Gross Settlement Systems and by holding reciprocal bilateral accounts with each central bank.
The system also requires commercial banks to prefund payments with deposits at the central banks.
Another key development is the Regional Payment and Settlement System (REPSS) of the Common Market for Eastern and Southern Africa (COMESA) that offers a choice of payment in either Euro s or US Dollars.
However, the REPSS has been rarely used for wholesale or trade transactions since inception.
The volumes of transactions settled through the EAPS and REPSS cross border payment systems remain low.
For instance, Kenya, which participated in both REPSS and EAPS in 2018, recorded volumes of 18,307 EAPS and 620 REPSS transactions valued at US$680 million and US$43 million equivalent, respectively.
In advancing the development of cross border payments, the West Africa Monetary Zone (WAMZ) in 2013 initiated the ECOWAS Payment and Settlement System (EPSS) project as part of the major component for the launch of the Eco.
With the support of the Afreximbank, the six (6) central banks in the West African Monetary Zone (WAMZ) in 2022 linked their RTGS with the broad objective of facilitating cross border payments that are initiated in the payer’s local currency and received by the beneficiary in local currency in real time.
The resulting interbank obligation would be settled at the end of the operating day on net basis in US Dollars.
Africa Continental Payment System Initiative 20.
Madam Chairperson, the Afreximbank initiative , the Pan African Payment and Settlement System (PAPSS) , which started in the WAMZ, is expected to be rolled out as a continent -wide payments system infrastructure.
It is expected to facilitate remittances, offer securities settlement and provide opportunity for Point of Sales and Automated Teller Machine transactions.
Direct participan ts of the PAPSS are the national central banks and regulated financial institutions, as well as payment service providers.
At present, PAPSS has undertaken successful integration from test and development environment to production environment for all the six (6) countries of the WAMZ , namely Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
Ghana, Nigeria and Gambia have successfully carried out controlled live transactions.
Nigeria sent and received daily transactions to and from Ghana and Gambi a successfully, while Ghana and Gambia also sent and received daily transactions to and from Nigeria successfully.
The time taken to complete an end -to-end transaction using the instant payment system was established to be on average 7 seconds out of the 120 seconds allocated for a complete transaction.
Cross border payment systems are not easy to implement.
First cross border governance arrangements differ.
Secondly laws across different jurisdictions may differ and multiple AML CFT regimes including KYC requirements can become a challenge.
To ensure there is a single source of primary data for conduct of customer due diligence on African entities, financial institutions, corporates and small-to-medium enterprises, Afreximbank has also set up a MANSA Repository Platform (named after Mansa Moussa, emperor of the Malian empire from 1823 to 1825) .
It is the first digital C ustomer Due Diligence platform of its kind in Africa, conceived and developed to address compliance issues in Africa, promote data quality and coverage in Africa, to minimise the difficulties faced by African entities in accessing funds from the international banks.
Beyond the minimisation of the difficulties African entities faced in accessing funds, the platform is expected to reduce compliance cost, facilitate intra-African trade and serve as an African Investment hub.
Challenges of Payments System Development in Africa 23.
While the integration of sub -regional/zonal payment systems has translated into some progress in Africa’s cross -border payment journey, it has also faced some challenges.
The size of national markets, limited opportunities to create economies of scale and enormous gap between the reality on the ground and the aspirations stipulated in formal integration arrangements have not inured to promotion of intra-regional trade among these regional blocs.
The Economic Community of Central African States (ECCAC) , for instance, has the least intra -regional trade of less th an 2 percent followed by the Arab Maghreb Union at 4 percent.
Common Market for Eastern and Southern Africa (CMEAC) and Economic Community of West African States (ECOWAS) intra-regional trades are estimated at 16 percent each.
Intra-regional trade among member countries of the South ern African Development Community (SADC) is estimated at 20 percent.
The low level of intra -African trade is also attributed to lack of diversification on account of over concentration on similar primary commodities, lack of value addition, non-inclusion of informal sector trade , as well as lack of regional financial infrastructure.
Further, integration of payment systems at a regional and continental level is hampered by the fact that member countries are at differ ent payment settlement systems levels , with sometimes distinct priorities – differing economic policies, limited payments regulatory framework, disparate IT infrastructure, and limited cross- border payments exposure – and without harmonized standards and regulations in the various jurisdictions .
Also, legacy and proprietary systems are inefficient and costly on account of time and resources required to promote interoperability and maintain these disparate systems.
Furthermore, the inability to link even developed national payment infrastructure s within the various regional economic communities remains a drag on cross-border payment infrastructure development in Africa.
Indeed, most African countries have fairly developed domestic payment infrastructure such as Real Time Gross Settlement Systems, National Switches, Cheque Codeline Transaction Systems, vibrant payment system with emerging and nascent financial technology firms, as well as vibrant mobile money sector s. Interestingly, these national payment systems are not linked to other national payment infrastructure to facilitate cross-border payments and, therefore, do not support regional trade.
The Way Forward 27.
While the future for AfCFTA looks promising, the barriers to cross - border payments including cost, speed, access and transparency need to be addressed in a collective manner.
The Financial Stability Board in October 2020 recommended the following measures for enhancing cross border payments:  First, Africa needs to improve on the existing payment infrastructures and arrangements to support the requirements of cross -border payments.
Technical and operational improvements to existing domestic and regional payment infrastructures that facilitate cross border payment need to be continuously made.
 Second, the various regional payment systems, (including SADC-RTGS, PAPSS , REPSS, STAR -UEMOA, GIM -UEMOA and SIRESS) need to be integrated to enable each system to communicate with the others.
Resolution of these issues would enable frictions culminating from different operating hours, high transactions cost, weak competition and access regimes to be addressed.
 Third, commitment to a joint public and private sector vision to enhance cross border payments is an important strategy that could help Africa realise the true economic potential of AfCFTA.
A common vision and agreed targets could encourage market participants and policym akers to work together to enhance cross-border payments; and  Lastly, the harmonisation of regulations, supervis ion and oversight frameworks could also mitigate challenges stemming from multi-jurisdictional nature of cross-border payments.
For instance, to enhance data quality and straight through processing, common message formats, including conversion and mapping from legacy formats and use common protocols for data exchange, should be adopted.
Indeed, given the right policies, Africa’s colle ctive efforts at integrating existing national payment systems could enable African firms to innovate, invest, and create job opportunities.
Together with digitalisation, an integrated payment system would help Africa foster convergence of institutional frameworks and create a more effective regional financing ecosystem.
Additionally, an integrated payment and settlement system would promote efficiency in regional trade by facilitating smooth flow of payments, underpinning economic activity and fostering transparency and efficiency in intra-African trade.
Conclusion 29.
Madam Chairperson, Council Members, Fellows, Distinguished Ladies and Gentlemen, in conclusion, let me emphasise that payment and settlement system is critical for enhancing intra-African trade and investment, the key objective of AfCFTA.
Through the Association of African Central Banks working groups on payment system, the Bank of Ghana is collaborating with other central banks to provide common solutions to the various challenges confront ing payment system development in Africa.
Collectively, w e are working t o deliver an integrated and interoperable continental payment system by linking all the regional payment systems, leveraging on the PAPSS Connectivity, to enhance the power of digital payment for value creation.
I wish to thank the Academy once again for offering me the platform to share my views on this important topic.
6TH GHANA CEO SUMMIT THEME: DIGITAL LEADERSHIP FOR THE DIGITAL ECONOMY SPEECH BY DR.
ERNEST ADDISON GOVERNOR, BANK OF GHANA 30TH MAY 2022 KEMPINSKI HOTEL GOLD COAST CITY, ACCRA Chairman of the 6th CEO Summit Founder of the CEO Summit CEOs & Captains of Industry Fellow Speakers Distinguished Guests, Ladies and Gentlemen 1.
Thank you for the opportunity to join you , once again, at this year’s CEO Summit, the sixth in the series since it was founded back in 2016.
First off, let me applaud the CEO Summit Team for the foresight in institutionalising this annual event that provides a platform for CEOs, policymakers, business leaders, entrepreneurs, among others, to network and discuss issues of relevant interest that affects their general con duct of business and their quest to continuously seek and advocate for policies that will enhance the business environment.
I must confess that the past two years has indeed been challenging for policy makers globally.
The COVID-19 pandemic and its impact of 2020, the much anticipated recovery in 2021 and the sudden Russian -Ukraine war have all played out to introduce complexities in macroeconomic management and dented confidence.
And so my remarks today will focus on “Restoring Confidence in the Wak e of Recent Macroeconomic Challenges”.
Given the uncertainty of the times, I deem this topic as appropriate and offers the opportunity for the business community to soberly reflect on the current trajectory of the Ghanaian economy in the face of multi ple shocks.
My address on this subject will focus on three main points: understanding the challenges; the impact of sequential shocks on the economy; and the coordinated policy actions to steer the economy back to stability and growth, and ultimately restore confidence.
Tracing the roots of the current macroeconomic challenges… 3.
Chairman, the world economy was impacted by the Covid- 19 pandemic in 2020.
Starting off as a health crisis, the impact quickly transitioned into an economic and financial crisis, which required synchronised global policy responses.
These ranged from l arge global fiscal stimulus packages, accommodative monetary policies, and macroprudential regulatory reliefs designed to ensure appropriate liquidity flows in the financial sector to prop up economic activity.
Here in Ghana, and within the context of avoiding an economic recession, some of these complementary policies were implemented , leveraging the ongoing digitalization process rolled out by the Government, to reduce costs and help cushion the fully impact of the pandemic.
Ladies and Gentlemen, although macroeconomic conditions at the end of 2019 remained on sound footing, alongside a rejuvenated banking sector that had just undergone reforms , the Covid-19 pandemic introduced serious macroeconomic challenges to the domestic economy.
Economic activity slowed sharply in 2020, due to the restrictive movements and supply disruptions; inflation surged to double digits due to increases in food prices; global supply chain disruptions impacted adversely on trade; businesses faced severe supply constraints with weak consumer demand and cost cutting measure s such as reduced working hours and staff layoffs .
In addition, the fiscal consolidation path was derailed, and the F iscal Responsibility Law, with a Fiscal Rule of a fiscal deficit of at most 5 percent of GDP was suspended to enable government support the ailing socio-economic conditions that had emerged as a consequence of the pandemic.
These adverse effects of the pandemic threatened to disrupt the considerable macroeconomic gains achieved prior to 2020 .
However, the policy responses and measures that were implemented helped moderate the impact of C ovid-19 somewhat and supported the economic rebound .
From 0.5 percent in 2020, GDP growth bounced to 5.4 percent in 2021, supported by the services and agriculture sectors .
Despite the growth rebound, some economic scarring occurred.
The significant revenue shortfalls, combined with increased Covid- related spending, resulted in a substantial financing gap , high fiscal deficits, and rising debt levels.
These debt sustainability concerns eventually led to the country’s sovereign credit downgrades, which technically blocked Ghana out of the international capital markets, deepening the financing challenges.
Distinguished Ladies and Gentlemen, in addition to the above challenges that complicated the rebound of the economy, was another external shock—The Russian-Ukraine war.
The war has further worsened supply chain bottlenecks that emerged during the pandemic, triggered global food and fuel price shocks, and resulted in elevated inflation globally.
With inflation at historical high levels, central banks all over the world immediately had to shift from th e accommodative monetary policy stance that supported the pandemic, to p olicy tightening.
T his triggered capital outflows from Emerging and Developing Economies, widened sovereign bond spreads, and put pressures on currencies similar to what we have observ ed in Ghana.
Of course countries with weakened fundamentals took heavier hits than those with strong fundamentals and buffers.
The developments in global capital markets , combined with internal challenges that resulted to the ratings downgrade, have played out to exacerbate price and exchange rate pressures in the domestic economy .
The Ghana Cedi came under severe pressure in the first quarter of 2022 as offshore investors exited positions in domestic securities at a time when domestic demand for forex had increased.
The FX pressures, coupled with tight forex liquidity due to absence from the International Capital Markets , contributed to the significant currency depreciation.
Cumulatively, the Ghana Cedi depreciated by 15.8 percent against the US Dollar in the year to 18 th May 2022, compared with an appreciation of 0.5 percent in the same period of 2021.
Recent price developments indicate elevated pressures from both domestic and external sources.
These include the global energy and food price shock, and its consequential upward adjustments on domestic ex -pump petroleum prices and transportation costs, domestic food prices, as well as the pass - through effects of the recent exchange rate depreciation.
Headline inflation has increased sharply from 13.9 percent in January 2022 to 23.6 percent in April 2022, driven by both food and non-food prices.
The Bank of Ghana’s inflation target is 8+/- 2 %.
The current inflation of 23.6 per cent is about three times the central target of the Central Bank, and has significantly complicated the conduct of monetary policy, making those of us in charge very uncomfortable.
But I am sure that our discomfort cannot be compared to the feeling of the ordinary man in the street who is confronted with these rapid changes in prices on a day to day basis.
I think we have all began to appreciate the importance of stability in sustaining livelihoods and standards of living.
The developments in the global economy have impacted Ghana strongly as it is occurring at the same tim e that the country is not able to access capital markets to raise money due to the ratings downgrade, as it has done for the past few years.
This has elevated Ghana’s external vulnerabilities and translated into balance of payments pressures, although, t he trade surplus improved somewhat, due to higher crude oil export earnings.
However, the significant net portfolio reversals and weak inflows into the capital and financial account resulted in a widened balance of payments outturn and loss of reserves in the first quarter of 2022.
The prevailing tight global financing conditions, and further policy rate hikes in advanced economies continue to make the external financing conditions unfavourable, posing real risks to the external outlook.
The developments have also impacted Government finances and created financing challenges for the budget.
The issuance of bonds and securities have not been met with significant uptakes by the market.
In response , the Government announced a series of expenditure cuts of up to nearly 30 percent to deal with the situation.
It is expected that the US$2 billion dollar syndicated facility will provide some relief to both the budget and the balance of payments.
Policy coordination efforts to rebuilding confidence has started… 11.
Although growth prospects remain positive, these macroeconomic challenges have dampened consumer and business confidence in the domestic economy.
The upside risks to the inflation outlook are significant, and t he second -round effects of upward adjustments in ex-pump prices and possible utility tariffs c ould further amplify inflation pressures in the outlook.
We have heard several arguments by stakeholders on the Bank of Ghana ’s response to the inflation problem, with some stakeholders arguing that these supply-side shocks cannot be resolved by raising the policy rate especially because the inflation we are experiencing is imported.
I took sometime during the recent MPC Press Conference to explain that the Bank is very much aware that supply-side shocks are more difficult to deal with.
The policy rate tightening emanates from the fact that the MPC assessed that, the shocks are becoming embedded in domestic prices.
Oil price shocks for example sends price impulses and spreads to other prices in the economy, and then affects economic agents ’ expectations.
Monetary policy response is directed at the second round effects of these supply- side shocks.
Consequently, the policy response to the challenges have been swift , which has seen implementation of prudent monetary and fiscal policies to regain macroeconomic stability.
Indeed, the inflation challenge has brought to the fore the importance of stability which we take for granted and has shown clearly that macroeconomic stability is a necessary condition needed to enhance confidence and build back better from the pandemic/war effects.
The measures taken so far include the following:  Policy rate hikes: Cumulatively since November 2021, the Bank’s MPC has raised the policy rate by 550 basis points.
First, 100 basis points in November 2021 , then 250 basis points in March 2022, and additional 200 basis points increase in May.
Currently, the policy rate stands at 19 percent.