ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
There is never a free lunch and I accept your invitation to pay for this meal by making some remarks in connection with the launch of the “Ghana Association of Bankers Conduct of Business Standards”.
I appreciate the Association’s foresight in putting together this code to guide intra-bank co nduct in Ghana.
The code complements your 2003 ‘Banking Code’ that set standards for dealing with customers and the general public.
As competition increases in the banking industry , through the lice nsing of more banks and the emergence of othe r intermediaries, the scope for unfair business practices can increase.
It is for this reason that it is opportune to launch a code of conduct that seeks to guide behaviour of member banks.
3 Mr.
Chairman, the code seeks to cure a number of potential ills and other anti-competi tive practices, inclu ding discrimination among banks, abuse of dominance, unfair luring of customers and interference in the busine ss of other banks.
Thus, the Code seeks to entrench ethical business practices, which is good for the long- term sustainability of your business.
While commending the Association for this effort, it is important to recognise that the value of the co de lies in compliance with its prescriptions.
The Association must therefore invest in educating Staff, Management and Boards of Banks on polici es and actions that can breach the code.
The Association must also invest time in monitoring compliance as well as create avenues for redr ess where there are breaches.
An annual review of banking practices and their compliance with the code and publication of the asse ssment will inform stakeholders about the progress being made in building an ethically sound banking system.
Chairman, let me abuse the privilege your invitation has offered to address a subject that is critical to the evolution and progress of our banking system .
About a fortnight ago, the President of the Ghana Association of Bankers made some remarks 4 about the problems faced by indigenous banks in attaining the minimum capital prescribed for the industry.
He questioned the rationale for ‘forcing every bank to be big’ and wondered why some banks cannot ‘by choice ’ remain small an d serve their chosen market niche.
Chairman, I was surprised by these sentiments and wondered whether they were privately-he ld views or those of this Association.
Luckily I met Mr.
President a few days later and served notice to him that I was ho ping for an earl y opportunity to counter the views he had eloquently expressed.
We must recognise, first of all, that technology has made the world smaller.
The competition our institutions face is not only domestic, but global.
In an in creasingly interconnected world therefore we cannot afford to just think “local”.
We are in competition with banks beyond our borders and our customers are looking beyond us to what opportunities are available elsewhere.
I went to a school whose motto can be translated literally as: ‘Think Ahead’.
It taught us we need not be comfortable with what we have achieved but strive to keep ahead of competition.
We must not just focus on mainta ining our comfort zone, merely 5 satisfying today’s needs but rather on how to position ourselves to survive in an increasingly competitive world.
Our forefathers may have thrived with canoes along the coastline, because they did not have trawlers chasing the same fish.
Today the economic terrain is comple tely transformed and we cannot expect to be competitive with canoes anymore.
Thus to remain competitive and relevant we have to think about size, structures, technology and expertise and th ese come with higher capital outlays.
Chairman, the impression should not be created that the only source of funds for investment is beyond our shores.
How many of our banks have explor ed the opportunities offered by our local Stock Exchange?
At least it is on record that one bank’s offer was over-subscribed when it listed, while other banks have successfully raised capital on the GSE.
So until we have exhausted these opportunities, we should not create the impression that capital cannot be found domestically.
The real challenge may be c ultural; how to eliminate the unwillingness of Ghanaian owners to share control with fellow Ghanaians.
I have wondered wh ether the next set of reforms should not require every bank to be listed on the stock market.
6 That way we provide another pair of eyes in addition to the regulators to superintend operations, which will be a definite boost for corporate governance and enterprise-wide risk management.
With the passage of the Banking Act 2004, Ghana moved to a universal banking system with higher and uniform minimum capital requirement for all banks.
The hitherto compartmentalized system of banking, comprising commerc ial, development and merchant banks was eliminated.
In 2008, the Bank of Ghana through a consultative process revised minimum capital requirements fo r all banks, with a phased implementation (at the request of the indigenous banks), for foreign and domestically controlled banks between 2009 and 2012.
The first phase was successfully completed in December 2009 as all eligible foreign-controlled banks re-capitalized to GH¢60 million.
The second phase, which requires the domestically-controlled banks and two foreign banks (licen sed in 2008) to re-capitalize to GH¢25 million was also completed at the end of 2010.
The final phase of capitalization is expect ed to be concluded by December 31, 2012 with all banks attaining the GH¢60 million minimum capitalization.
7 Mr.
Chairman, hindsight cannot fault the Bank of Ghana for acting on the recapitalization of banks at that time.
The new capital requirements were set in anticipation of the growth in the economy, especially the emerging oil sector.
The re-capitalized banks are better positioned to finance large transactions at the expense of the domestic banks; further augmenting their competitive advantage Mr Chairman, even with the higher le vels of capital; there are still serious challenges with financing transactions in the oil sector.
It is a matter of so me regret to the management of the Central Bank that we are regularly invited to grant waivers of single obligor limits in order to enable the importation of crude oil and petroleum products.
We have granted this waiver reluctantly in the past, because it amounts to aban doning the prudential norms that have been introduced to minimize risks to banks.
Chairman, this practice cannot be continued.
It should be possible for our banks to grow to enable them finance large transactions or, in the event, to use syndication as a tool for handling occasional extraordinarily lumpy transactions.
8 I want to encourage banks to apply this code and spearhead a system of syndication that achieves risk sharing while enabling the financing of critical imports such as oil.
Chairman, I don’t get many opportunities to speak to so many bankers, so let me take advantag e of this opportunity to comment on one other issue that is important for the continuing development of the banking industry.
Because of the shortage of qua lified bankers in the economy, a number of staff dismissed for un ethical or fraudulent behaviour from some banks have found th eir way back into the banking system and continue to engage in malfeasance.
As this Code emphasizes, banking thrives on good ethical practice, trust and confidence.
Therefore people who fail the integrity test should not be entertained in the banking sector, otherwis e you risk exposing the sector to loss of credibility and reputation in the eyes of the public.
Accordingly we require that du e diligence be carried out on prospective staff in order to ensure that our personnel meet the fit and proper test.
The Bank of Ghan a will be happy to collaborate with the banks to create a database of staff that can be consulted before decisions on appointments are made.
9 Finally, Mr.
Chairman, following th e global financial crises, the maintenance of financ ial stability has become very important for the very survival of the financial system.
In response to the crisis, many Central Banks have established a system that continuously monitors the entire financial system and identifies risks to stability with a view to making recommendations for corrective action.
The resp onsibility extends beyond the banking sector and encompasses th e entire financial system as well as its interaction with the industrial sector.
Consequently, the Bank of Ghana has established a Financial Stability Department to assess the macro-prudential risks facing the economy and make suggestions for dealing with these risks.
One of the key outputs of the Financial Stability Department will be the publication of a Financial Stability Review, which will attempt to draw lessons from th e systemic risks on our banking and financial systems.
We intend to share the report with you, our stakeholders.
It is our hope that all of us will cooperate in our pursuit for information for anal ysis and discussion of the outcomes.
10 Mr.
Chairman, Distinguished Guests, Ladies and Gentlemen, let me once again express my appreciation for the opportunity to be a part of the launch of the Ghana Association of Bankers Conduct of Business Standards.
I wish you the greatest success in the implementation of this code and look forward to a vibrant banking system that is supportive of Ghana’s economic growth agenda.
Thank you all for the attention.
1 40TH ANNIVERSARY OF BANK OF MAURITIUS LECTURE BY DR.
PAUL A. ACQUAH, GOVERNOR, BANK OF GHANA TOPIC: GOVERNANCE AT THE INTERNATIONAL MONETARY FUND: QUOTAS, VOICE AND ALL THAT DEBATE MAURITIUS, DECEMBER 4, 2007 1.
It is a pleasure to be here to participate in the 40 th Anniversary celebrations of the Central Bank of Mauritius.
I thank Governor Bheenick for inviting me.
It is indeed a great occasion; and I can share the sentiment because the Bank of Ghana is also celebrating this year its 50 th Anniversary.
Ou rs coincides with the 50 th Anniversary of Ghana’s Independence .
An Anniversary such as the Bank of Mauritius is marking this year is indeed historic and a moment of pride.
My lecture today is on the International Monetary Fund (IMF).
In our part of the wo rld, in African countries, the IMF conjures painful Structural Adjustment Programs and stringent conditionalities and financing of balance of payments problems, post-conflict economic recovery, and debt relief.
It means that the Fund has had to be involved in most of Africa for much of its post -independence period in programs and policy -based 2 lending.
This has sought to assist in coming to grips with macroeconomic problems that have kept African countries mostly behind in the race towards accelerated growth and development.
For over a decade now, Mauritius relations with the Fund have been confined to policy advice under Article IV consultations.
Mauritius usually ranks highly on the list of countries with sound economic management, competitiveness, and gove rnance ratings.
The indications are that economic policies have been broadly successful over the past years; and the Bank of Mauritius has indeed much to celebrate for being an integral part of the record of accomplishment.
I should say that your experienc e offers useful lessons for Africa that is seeking to achieve the Millennium Development Goals.
Now to the topic today - “Governance at the IMF ”.
This is a raging debate going on about the role of the Fund.
The focus and the nature of the issues involved t end to shift over time as the international financial system and the nature of the participants and stakeholders evolve.
But the issue of Quota and Voice has been always , historically, fundamental in the discussions on governance, decision-making, and operations in the Fund as a cooperative institution.
Quota and voice in the Fund is central to the debate because it is about power - sharing; it is about burden -sharing, and it is about the 3 legitimacy, relevance and effectiveness of the institution.
And, it has its genesis in the Articles of Agreement and in some of the informal understandings reached at Bretton Woods.
It is important to recall that the IMF and the World Bank, its sister institution were conceived during a conference in Bretton Woods, New Hamps hire in July 1944 by 45 governments who sought a framework for reconstruction after World War II and for economic cooperation in order to avoid a repetition of the economic policies that contributed to the Great Depression of the 1930s.
In December 1945, 2 9 member countries signed up to the Articles of Agreement which led to the establishment of the Bretton Woods system of fixed exchange rate regime.
Africa was represented by only these countries, Ethiopia, Union of South Africa and Egypt.
The rest of Africa was under colonial rule at the time.
The governance of the Fund, in terms of its organizational structure, shareholding and decision -making, financing model, and its monetary character , was built as a result of skillful negotiations to reconcile members ’ interest in the pursuit of a common purpose.
And, indeed, the outcome has influenced the Fund’s operations even as it has evolved and adapted to 4 changing circumstances in the global economic and financial system.
Two examples illustrate this point.
First, the fact is that the United States and the United Kingdom were the principal architects of the plans for post -war monetary cooperation at Bretton Woods.
And in creating the Fund and the World Bank, they agreed that the United States would have the ‘right’ to appoint the President of the Bank, as well as the Deputy Managing Director of the Fund (there was only one DMD until very recently when Michel Camdesus thought the complexity of managing the institution justified the appointment of two additional DMD s).
Under this informal agreement, Europe would appoint the Managing Director of the Fund.
The US promptly proceeded to nominate Mr.
Eugene Meyer, a businessman and owner of Washington Post as the first President of the World Bank and the European Union nominated Mr.
Per Jacobson, an Economist steeply involved in multilateral economic and monetary cooperation at the BIS as its first Managing Director.
This agreement contrasts with the provisions under the Articles of Agreement itself that the Executive Bo ard “selects 5 the Managing Director” and can dismiss a Managing Director.
Moreover, the Articles of Agreement specify that the Managing Director should operate under the general direction of the Executive Board.
The informal agreement in practice prevails today.
The Executive Board’s power in this matter remains on paper only.
The current debate ostensibly turns on the need and desir e to bring transparency and participation in the selection of the most qualified person for the position without restriction of national origin.
The main underlying concern is that the power of influence and the interest of the key architects of the Fund continue to be prominent in this vital process and that this aspect of the Fund’s governance creates a democratic deficit in voice and representation at the Fund.
A related issue in fact is how effectively th e direction of the institution is exercised and evaluated by the Board with no effective appointing authority.
Take another historical example: t he Fund currently operates l argely on a financial model characterized as “The Mixed Bag of Currencies” proposed by White of the United States (Horsefield, 1968).
Under this plan, the Fund sells the currency of member country in deficit for currencies of other member countries that ar e freely useable.
This was a result of 6 a long discussion and an eventual compromise that led the United Kingdom to abandon the Plan proposed by Keynes of Britain, which would have amounted to the creation of an international currency called the bancor to l end to member countries.
Several arguments are reported to have been advanced in pressing for the White proposal (including difficulties of obtaining US congressional approval) but it has been noted that “the more weighty economic argument was that the potential US commitment to give balance of payments assistance to the rest of the world through the Fund would have been more than twice as large as under the Keynes Plan .
The burden for the US could have been US$6 billion and US$2.75 billion under the Keynes Plan” (Polak, 2005).
But this compromise also means that the ability of the Fund to provide balance of payments assistance was circumscribed.
This example illustrates the inherent tendency to negotiate the best national interest even as a member seeks to promote the common goal of the cooperative institution.
It is t his tendency that is said to have come into play at the creation and it is part of the living history of the Fund; and it underscores the importance of being at the table.
Today, the Fund, as it is commonly called, is made up of 184 member countries.
Its membership jumped sharply in the 7 1960s, when a large number of former colonial territories many from Africa joined after gaining political independence and again in the 1990s when the IMF welco med as members, the newly independent countries of the former Soviet block upon the dissolution of the Soviet Union.
An institution of so many member countries requires a balancing of interests to be effective and relevant.
And it should be accountable to all its stakeholders, be they creditors or borrowers.
The world economy has gone through significant changes over the years .
And there is a growing number of emerging market and developing countries that have become creditors to the IMF blurring the distinction between creditor and borrower countries.
The Fund has grown to extend the scope of surveillance beyond exchange rate policies and closely related issues.
The increasing globalization of the World Economy with potentially significant spillover effect s of members policies on other members irrespective of size make it important that all members have a say on policies of Fund.
The authority of the Fund and its role would resonate to the extent that the Fund is seen as representing the entire membership.
Voice and representation has been on the table for discussions over the past years.
The fact that it has climbed up 8 the scale of agenda at the Fund underscores how important the Fund views the need to adapt to the fast changing dynamics in the world economy and in corporate governance practices, and the need to safeguard the authority and relevance of the Fund.
Obviously some member countries are frustrated with the pace of reform at the Fund.
To quote South African President Thabo Mbeki at a recent g athering of G20 Finance Ministers and Central Bank Governors in Klienmond, South Africa, he said, “ even when modifications to the international financial architecture became necessary, especially during periods of global financial turbulence, the outcomes have inevitably preserved the status quo”.
The issue really collapses around quotas.
The founding members have been reluctant in giving out portions of their control through quotas as new and stronger members join the Fund.
Now the question is, as more an d more countries become relatively stronger in the dynamics of global finance and trade, how the Fund should adapt to these new realities?
The principle of equality of states was recognized at the inception of the Fund through the creation of equal basic v otes for all members.
The basic votes which peaked at 15.6 percent of the total voting power in 1956 has fallen precipitously 9 thereafter to a historic low of 2 percent at present, as no mechanism was set to protect against erosion in successive quota increases.
The reality is that quotas represent the anchor of influence in the Fund and the issue of legit imacy touches on the type of influence that members have on the Fund’s decisions and policies including the level of access to its resources .
To put it in simple terms “we all need to be at the table to have the opportunity to influence decisions especially should these come to be based on votes ”.
A clear case is the design and modus operandi of the Multilateral Debt Relief (MDRI) and the HIPC initiatives.
Those designing these facilities have had a very strong influence on shaping the facility with outcomes that are not necessarily neutral even if they serve the best interest of the organization (and the membership as a whole).
It is not without reason th at the quota formula has been a source of many contentious discussions because the metrics determines the size and distribution of quotas which is a source of the power-sharing debate in the first place.
Currently quotas are calculated according to a membe r’s gross domestic product, current account transactions, and official reserves.
The quota determines a mem ber’s voting power in IMF 10 decisions and is reviewed every 5 years with the next review due in 2008.
If for example they were to be based on a measure of openness including or excluding intra custom union trade as currently under consideration , it would significantly affect the relative positions of European countries.
Similarly, the use of PPP or market exchange rate s in GDP measurement would generate different distribution s of quotas that would strongly affect the newly dynamic (emerging market) economies.
I believe that a powerful voice and representation on the part of developing countries in the Fund will influence the methodology of determining qu otas.
This would bring a fundamental adjustment to quota s to take account of the major changes that have occurred in the relative economic and financial positions of member countries, with a large dose of fairness for those currently under -represented.
This would also require changes to the size and composition of the Executive Board.
I am sure you would appreciate why countries like China and India are asking increases in their quotas and the African constituency is asking for higher representation at th e top level of management such as Deputy Managing Director.
This is not 11 immaterial because you can then have influence and shape facilities and also how they are implemented and administered.
To put it more bluntly, the debate on quotas is a manifestation of the inner struggle for control”.
What is clear is that nobody disputes that voting power in the Fund should take account of the capacity and willingness of members to support the Fund’s activities and to contribute to its financial resources.
Consensus seem to have emerged that the vote and quota structure should take into consideration a number of factors including:  Significant growth in the size and structure of emerging economies.
 The changing functions of the Fund particularly in the provision of global public goods (GPG), in which emerging economies can be very instrumental and feature prominently as potential in dealing with various global financial issues.
 The increased willingness on the part of emerging markets to support the Fund, both in its day-to-day activities as well as in its crisis management.
 The low voting rights of African countries and other newly independent states in Eastern Europe despite their numerical strength in the Fund .
In particular, these 12 countries perceive the current st ructure as under - representing their importance in global financial relations which makes it difficult for them to articulate and promote their interest through the traditional IMF structures.
The Fund is currently reviewing the issue of voice and quota and seeking the fundamental changes that will address the imbalances between the current quotas of member countries and their relative economic and financial positions in the global economy.
The international financial architecture, of which the Fund continu es to be a major player, thrives on its international legitimacy and the ability to act quickly.
The Fund has universal membership and so its charter provides it with the mandate to take coordinated action in world affairs, especially in times of crises.
B ut its historical development has unfortunately bestowed on it a structure that needs urgent review to make it acceptable and legitimate to move to the new design of international financial architecture.