ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
For instance, reduction in inflation helps to reduce uncertainty, and helps economic agents to extract information from relative prices.
This leads to more investment and efficient resource allocation and higher growth.
Ladies and Gentlemen, strong financial institutions operating in a stable macroe conomic environment are the bedrock of financial stability.
Such financial institutions typically have a strong capital base well aligned to their risk profile; with a high quality portfolios of assets, high accounting standards, and robust balance sheets; and they have a culture of timely 5 | P a g e disclosure of information and submit to the discipline of the market.
Such institutions are less vulnerable to external shocks and are therefore a source of resilience for an economy.
Madam President, this year has been quite challenging and as supervisors, we have been working assiduously to implement measures that would change the recent narrative associated with the banking sector as fragile and poorly supervised.
In so doing, we have identified weak cor porate governance practices as one of the underlying causes for the challenges facing the sector.
Corporate governance plays an important role in promoting a sound financial system —contributing significantly to improving overall performance, not only profits but more importantly reputation of banks and credibility of the entire financial sector.
Good corporate governance mechanisms revolve around the basic tenets of fairness, transparency and accountability .
Good corporate governance is critical to the proper functioning of the banking sector and the economy as a whole.
Ladies and Gentlemen, banking is a business and a good business at that but one that demands integrity and 6 | P a g e unquestioned reputation.
Let me repeat a story once shared by a former Governor of the Bank to this fraternity.
The Goldsmiths, who orig inated banking, saw a business opportunity a fter realizing that people who deposited gold with them only withdrew a fraction at a time , while others placed more deposits.
They then deduced the possibility of profit making by lending out a proportion of the gold deposits and hoping that all the gold would not be recalled at the same time.
But, the goldsmiths were not experts in the theory of probability.
Hence, their credbility and reputation became the most priced asset.
They became acutely aware that if at any given time the public lost confidence in the ir ability to safeguard the deposits, a run on them would bring certain calamity.
Over time the business of banking has grown in complexity but the basic tenets of credibility and reputation has fundamentally remained the same.
Your own Institute, the Chartered Institute of Bankers Ghana has as its motto, Honesty and Integrity.
All over the world, t he history of banking crisis indicates that without the public ’s assurance of well-capitalized, liquid and sound banks, the intergrity of the financial system, just like the Goldsmith, would be at risk.
The system would be 7 | P a g e unstable, prone to a run, resulting in closure s and financial distress for depositors .
This will spillover to economic challenges and weaken growth prospects in the long run.
Globally, there are several examples of corporate governance failures in the financial sector which had adverse economic consequences.
Indeed, the global economy is still recovering from t he contagion effects of the US f inancial crises, which occurred about a decade ago.
In our own history, the banking sector has witnessed its fair share of corporate scandals and bank failures.
Looking back to the 1980s , the Ghanaian economy experienced one of its worst performances which spilled over to the banking sector.
Signs of financial distress emerged as public confidence in the financial sector waned , aggravated by a demonetization programme , and negative real interest rates on bank deposits.
The loan books of banks became severely impaired and eroding the capital base of the affected banks.
Over time, t he economic difficulties coupled with poor corporate governance structures resulted in the eventual collapse of four banks and restructuring of o thers.
These failures prompted the need for extensive policy measures and reforms to strengthen the legal and regulatory 8 | P a g e frameworks.
Several laws were enacted to enhance business practices and risk management systems in the banking industry.
As time progressed, other pieces of legislature were enacted in response to the changing dynamics and in line with international standards.
Ladies and gentlemen, in re counting this history, I am seeking to draw attention to the adage that ‘history repeats itself’.
Despite the improved regulatory environment and supervisory frameworks, we have witnessed the resolution of two banks this year.
W hile no systemic challe nges to the financial sector arose from the resolution, it is useful to understand the underlying factors and reposition the sector to avoid the same mistakes in the years ahead.
Let me be upfront and say that th ough the failure of the two banks was due to significant capital deficiencies , the underlying reason was poor corporate governance practices within these institutions.
In this instance, we saw the dominant role of shareholders who exerted undue influence on management of the bank s, leading to poor lending practices.
This was also reinforced by weak risk management systems and poor oversight responsibility by the board s of directors.
Some of the examples of recklessness that led to the failure of the two banks include: 9 | P a g e  Co-mingling of the banks ’ activities with their related holding companies.
For instance, one bank was paying royalties for the brand name , even at the a that the bank’s financial performance was abysmal and could not pay dividends.
Interestingly, the royalties were approved by four (4) out of seven (7) members of the Board without the consent of the other significant minority shareholders including an International Financial Institution.
As a result, the international institution p laced a notice on its website abrogating all relationship s with the Bank and this led to most of the foreign lenders cutting off their credit lines to the Bank and recalling their credits thereby creating serious liquidity squeeze to the bank.
 Also, v ery high executive compensation schemes were being operated by the affected banks which were not commensurate with their operations.
 Non-Executive Directors of the banks co mpromised their independence and fiduciary duties to serve as checks on Executive Directors.
This was because rewards such as 10 | P a g e business class air tickets were being granted to them annually.
 Interference by Non -Executive Directors in the day -to- day adminis tration of the banks weakened the management oversight function of executive directors .
 Non-adherence to credit management principles and procedures as the banks were heavily exposed to insiders and related parties.
There was also no evidence of interest payments on these investments.
The investments were therefore impaired, but some members of the Board at the time accepted the responsibility to pay off the said amount through a board resolution.
 Diversion of funds to holding companies and their related parties was wide -spread.
In the case of one Bank, placements could not be traced to the bank’s records though some customers showed proof of their investments with the Bank.
11 | P a g e  Irregular board meeting also accounted for the weaknesses in the board oversight.
 In all of these cases, one thing was clear, and that is, the banks could not de lineate themselves f rom their past practices as finance house s. They followed the same practice of borrowing from high net worth persons at a very high cost s without any plans to bring themselves in line with the industry norm.
Certainly, it is for these numerous reasons that the central bank is seeking , among others , to enhance corporate governance practices as well as risk assessment frameworks across all banking institutions .
This will contribute significantly to improve overa ll performance as well as the reputation of banks and credibility of the entire financial sector.
Some may ask, what were the Banks supervisors doing during all this time with such gross violations going on in the banking sector.
Upholding the highest ethical standards and professionalism in the performance of our supervision function cannot escape my watch going forward, and I 12 | P a g e demand same from you all.
We shall employ an appropriate mix of both on -site supervision and off -site sur veillance to implement the Risk Based Supervision Framework.
The Bank’s supervision examiners have built capacity on the subject and will assess banks’ risk management framework s for effectiveness, responsiveness and timeliness in dealing with risks, deplo ying resources and in protecting depositors’ funds.
As part of the Bank of Ghana’s regulatory mandate, we are working on corporate governance directives for the banking sector.
Among others, the se directives will focus on oversight responsibilities of the Board of Directors and bank management, prioritize risk management systems , and ensure independent audit roles, among others .
In particular, the guidelines will impose the tenure of Chief Executive Officers and Non -Executive Directors of banks, the size of bank Boards, the retiring age for Directors and disclosure of attendance at Board meetings by Directors in annual accounts.
These initiatives are underscored by the fact that banks need sound corporate governance practices to build public trust and confidence, as well as operational credibility .
Without these, banks stand the chance of eroding public trust 13 | P a g e and ultimately jeopardizing shareholders investments and depositors’ funds and most importantly wea kening economy activity.
Another guideline which will strengthen corporate governance structure s in the banking sector is th at on financial publications .
This has been updated to include detailed corporate governance disclosures by banks and the inclusion of provisions on corporate governance under the Banks and Specialized Deposit taking Institutions Act, 2016 (Act 930).
The guide for financial publicati ons seeks to ensure that International Financial Reporting Standards (IFRS) are adopted in the preparation and presentation of financial statements.
It also seeks to clarify and provide direction as well as bring uniformity in the financial reporting process across the industry.
In addition, the Bank has issued the Basel Capital Requirement Directive (CRD) for feedback from the banking industry as part of preparations towards the implementation of the Basel Capital Accord.
All these seek to achieve fairness, transparency and accountability, which are core tenets of good corporate governance.
14 | P a g e 26.
These notwithstanding, there is also a role for the financial institutions even as the central bank updates the role corporate governance plays in its approach to supervision.
Financial institutions must embrace these efforts with a strong internal governance culture committed to the highest standards of integrity, transparency and proper controls.
2018 and beyond 27.
Madam President , in the year ahead, our banks will be Basel II/III compliant .
As we speak, all banks have the Capital Requirement Directive and I implore your active participation in the implementation process.
Following the passage of the BSDI Act, 2016 (Act 930), the Bank of Ghana has reviewed existing directives and regulations to align with the Act .
This, together with the Internal Capital Adequacy Assessment Process (ICAAP), will strengthen the supervisory review process, which is a requirement under Pillar II of the Basel accord.
We are also driving the disclosure requirements in conformity with Pillar III of the Basel accord to enhance appropriate information flow to market participants.
Consequently, the Bank will ensure strict adherence to the 15 | P a g e Guide for Financial Publication and the BSDI Act particularly with regard to publication of financial statements (both audited and unaudited), and other regulatory breaches.
In 2018, Banks will be required to strenghten their capital base with the revision to the minimum capital requirement.
The GH¢400.00 million minimum capital requirement is in line with the broader financial sector reform plan which seeks to develop and strengthen the banking sector to support the government’s transformational agenda.
We will aggressively ensure that banks comply with this directive.
In view of this, w e shall start reviewing banks’ capital build-up plans for compliance to the directive and assist banks which would consider the option of mergers and acquisitions.
We would also engage the Ghana Stock Exchange to facilitate processes for banks seeking long term equity financing to list on the exchange.
The key risk in the banking industry today, is the increasing level of impaired assets.
This has heightened bank’s risk aversion to credit delivery.
Our immediate response is to reduce some of the structural bottlenecks in the credit process.
Currently, we are reviewing the governing 16 | P a g e legislations on the credit reference and collateral registry systems.
These are to ensure that banks submit both positive and adverse findings on borrowers to the bureaus and also address some thorny foreclosure issues.
I hav e requested in my last quarterly meeting with the Chief Executives of Banks, detailed plans on how each bank will resolve its non-performing loans on a loan by loan basis.
We shall enforce our directive on loan write -off going forward, and require appropri ate disclosure of written -off facilities in the published financial statements of banks.
It is our expectation that the national identification program coupled with the improved economic prospects would support these measures and help in reducing the incid ence of loan defaults in the banking sector.
In the coming year, Madam President , crisis management would be a more concerning issue, more especially the crisis response capacity of banks .
This is a lesson I learnt the hard way when I assumed office earlier in April this year dealing with 2 banks nearly on the verge of collapse and it is a sure way for enhancing customer confidence in the system.
17 | P a g e 35.
The deposit protection scheme is expected to come on stream next year in line with the BSDI Act and the Ghana Deposit Protection Act, 2016 (Act 931) to provide a safety net for vulnerable depositors in the event of a bank failure.
I entreat banks to study the Ghana Deposit Protection Act to know the requirements for enrollment on the scheme.
The management of potential threats to financial stability and the avoidance of systemic crisis would also preoccupy our attention in the coming year.
To ensure the safety and soundness of individual banks, our risk focus supervisory frameworks will gauge cross s ectoral interactions among financial players.
The financial boundaries are increasingly becoming blurred, hence there is need to adopt a holistic macro-prudential approach and implement consolidated supervision in line with the BSDI Act, 2016 (Act 930).
To this end, we shall continue to engage other regulatory bodies, both domestic and external , and share information and experiences.
In particular, we shall continue our collaboration with the Central Bank of Nigeria (CBN) to conduct joint examination on banks with Nigerian parentage under the framework of the College of Supervisors of the West African Monetary Zone (CSWAMZ).
18 | P a g e 38.
In recent times, there have been increased activities in the payment ecosystem as a result of innovation and its role in promoting financial inclusion which is a global goal.
The Bank in order not to stifle innovation and a lso create the enabling environment drafted the Payment Systems and Services Bill to replace the existing Payment Systems Act 2003 (Act 662) and the Guidelines for Electronic Money Issuers (2015).
The Bill is expected to enhance electronic banking, agency banking, and payments and also provide support for a strong and resilient banking sector.
I have noted that banks have formed various strategic alliances with Mobile Money Operators (MMOs) and financial technology firms to transform the way banking produ cts are delivered.
Through these partnerships the unbanked are able to purchase Government debt through the use of mobile phones, receive inward remittance on mobile device and link bank accounts to mobile money wallets for access to micro - loans.
Another form of partnership between the banks and MMOs is the holding of mobile money customers’ funds by the commercial banks.
All mobile money float currently resides with commercial banks as MMOs are not authorized to hold funds.
The top 5 banks holding these float as at 19 | P a g e October 2017 included Fidelity Bank , Ecobank, CAL Bank , Stanbic Bank and HFC Bank.
We encourage all banks to take advantage of the telecos platforms to further support the financial inclusion efforts.
The Bank of Ghana is reviewing its licensing procedures when lower tier institutions such as savings and loans companies want to migrate to banking institutions.
We are also reviewing definitions around fit and proper test in approving Directors of financial institutions including possible annual certifications of their knowledge of key banking risk assessments.
We may impose requirements for directors and senior management of banks to certify related party transactions.
We will impose swift sanctions to in dividuals and institutions that infringe or breach our regulations.
We will scrutinize interbank borrowing and placements and review the manner in which we provide emergency liquidity support.
We will advocate a whistle blower provision to protect individuals who raise alerts to the Bank of Ghana on malpractices by the banks.
To conclude Ladies and Gentlemen, the aim of the Institute of Bankers is to heighten professional excellence in the Banking Industry in Ghana.
Your motto of Honesty and Integrity need s to be jealously guarded to positively project 20 | P a g e the profession of banking.
Despite the daunting odds facing the profession, successive leaders of the institute have made significant strides to make the institute what it is today.
I charge the Institute and current executive of the institute to up its game and conduct the necessary training and awareness programmes required to ensure high ethical and professional standards in the banking fraternity.
Madam President , on this note let me thank you for the attention and wish you all compliments of the coming festive season.
<p>The historical roles of central banks in most developing countries, including Ghana, have been shaped by development strategies adopted over the period.
Bank of Ghana is no exception and the Bank’s policies and activities have been shaped by changing political and economic conditions over the years.<br></p>
<p>The Bank of Ghana is also working to enhance the credit infrastructure further.
We have been working in consultation with the Ghana Association of Bankers, to review the existing Base Rate model.
As you will recall, the idea behind the model was to bring transparency to base rate setting and hence lending rates in the economy; and also to promote uniformity in the definition of determinants of the Base Rate in the industry generally.
The Committee has completed its work, and hence a draft notice would be issued soon for implementation.<br></p>
<p>Mr.
Chairman, with paradigm shifts on monetary policy making in the global economy, it became clear that the direct instruments were not only devoid of market or price signals but also distortionary in the allocation of resources.
The prevalence of state-owned banks in Africa at the time further perpetuated such distortions as political directives informed the allocation of financial resources to the economy.
Thus, there was the need to move away from the direct control to market-based regimes introduced in the late 1980s under the structural adjustments and financial sector liberalization policies pioneered by the IMF and World Bank.
<p>The specialized deposit taking institutions of which the savings and loans companies are dominant is fast growing amidst intense competition.
The sector contributed 14.4% of the banking industry’s total assets as at end September 2016 and poised to grow further as Bank of Ghana continues to receive applications from prospective institutions.
Presently, there are 29 licensed Savings and Loans companies and will urge you to ride on the back of innovation and technology to gain a foot hold in the market.<br></p>
<p>Let me put things into context by stating some facts about Agriculture.
The statistics we all know show that on average, Agricultural Sector accounts for about 22 Percent of GDP.
However, the sector receives an average of 4.0 percent of bank lending.
If we are to succeed in transforming agriculture and promoting agribusiness in Ghana then we must scale up financing to the sector.
<br> </p>
<p>Good evening.
All too soon, a year has passed by and we are once again gathered for this special occasion which brings together all the distinguished professionals in this very unique profession.
Thank you for the invitation to this dinner and to address the Institute of Bankers at the end of a week-long of activities marking “Bankers” week.
It has now become a tradition for the Governor of the Bank to talk about the developments in the banking and financial sector, the economy and the outlook for the ensuing year, and I will like to continue that tradition tonight.
This will be the second time that I am doing so.<br></p>
<p>It is gratifying to note that the performance of the interoperability platform since implementing the first phase has been impressive based on the key pillars of <strong>CONVENIENCE</strong>, <strong>ACCESSIBILITY</strong>, and <strong>VALUE FOR MONEY</strong>.
Since then, total transaction value and volume has increased from GH¢8.3 million and 96,907 respectively in May 2018 to GH¢32.6 million and 319,094 respectively in September 2018, representing 292.8 percent and 229.3 percent growth in value and volume respectively.
This growth trend is expected to increase further when the second phase becomes fully operational and other innovative products and services become available.<br></p>
<p>Our banking system is becoming stronger with capital adequacy ratio reported at 19.1 per cent at the end of August, significantly above prudential requirement of 10 percent.
Non-performing loans of the industry continue to decline and we expect a major reduction as banks begin to implement write off policies, in line with approvals received from Bank of Ghana to address the legacy loans that have been fully provisioned for.
We have also observed a return to efficiency in the industry as operating expenses across banks are beginning to reduce, which should ultimately result in declining interest rates.<br></p>
<p>More recently, Ghana’s payment system has witnessed significant changes on account of the growing role of Financial Technology Firms (FinTechs) and payment innovations.
A recent survey conducted by the Bank shows that there are 71 FinTechs providing both front- and back-end services to Ghana’s banking sector.
These developments are broadly in line with the country’s developmental agenda of formalising economic activities through digitisation to enhance growth prospects.<br></p>
<p>Underlying the legacy problems in the banking sector which we have recently witnessed, were years of poor corporate governance, poor risk management practices, related party transactions that were not above board, regulatory non-compliance, and poor supervision, leading to a significant build-up of vulnerabilities in the sector.<br></p>
<p> Overall, the country is on the path to full economic recovery with a strong first quarter growth.
The growth pickup reflected a stronger rebound in the services sector.
Also, the Bank’s Composite Index of Economic Activity (CIEA) registered a pickup in the year to May, reflecting increased industrial consumption of electricity, construction and exports.