GH¢6.3bn Locked Up In Risky Investments

Rev. Daniel Ogbamey Tetteh

ABOUT GH¢6.3 billion of funds invested by asset
fund managers in Ghana’s asset management industry are locked up in risky
investments.

This comprises short-term unlisted bonds,
direct private-equity stakes and related-party deals for small and medium-sized
businesses.

The Securities and Exchange Commission (SEC),
which made this known, courtesy to a forensic review it undertook of the asset
management industry last year, said fund managers invested heavily in fixed
deposits within the non-banking sector.

“With the failures of some banks, savings and
loans companies as well as microfinance firms, these investments have become
toxic,” it emphasised.

SEC said it was as a result of the foregoing
that the licences of 53 asset management firms were revoked in November 2019.

And such reasons underlie why the Ministry of
Finance has written to Parliament to seek approval for a total amount of GH¢15.6
billion to enable it pay off investments and funds that have been locked up
with some insolvent banks and financial institutions.

According to SEC, the asset management industry
in Ghana had a total asset of over GH¢19 billion (as at end 2018), held up in
pension funds, collective investment schemes (CIS) and other funds
(discretionary funds).

A memo by the Finance Ministry to Parliament
which lends credence to the above-stated, said: “It is worth noting at this
point that the financial sector is highly interconnected. A mapping exercise
conducted by BoG on exposures between and across financial institutions in the
Ghanaian economy shows that as at September 2019 total exposures of banks to
other financial institutions were approximately GH¢1.54 billion.

“Total exposures of banks to the securities
industry was approximately GHȻ839.42 million.
Banks’ total exposure to the insurance industry was approximately GH¢33.44
million. Total exposures of banks to SDIs was approximately GH¢ 669.51 million.

It continued that “The pension industry’s exposure
to banks was approximately GHȻ863.63
million.  Insurance industry have place
an amount of GH¢839.33 million with banks. Total exposure of SDIs to the universal
banks was approximately GH¢933.64 million,” it stated.

Additionally, it said the total exposure of savings and loans institutions to other financial institutions were approximately GHȻ637.61 million while the savings and loans industry held approximately GHȻ467.73 million of other financial institutions funds.

BY Samuel Boadi

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