Ghana Banks Merge

Commercial banks in the country are working to issue bonds in the country. 

The move, which is still being considered by players in the industry, is expected to help them raise long-term capital to finance long-term projects in the country when it is finally identified to be feasible. 

The Managing Director of First Atlantic Bank, Mr Gabriel Edgal, announced this at a breakfast meeting under the auspices of the bank in partnership with the British High Commission in Accra. 

The meeting, which attracted a large number of experts in development financing, bankers, economists, legal practitioners among others, was aimed at exploring avenues to attract foreign investments into the country. 

Mr Edgal said the nature of bank operations did not allow them to go into long-term financing although they appreciated its importance. 

One major concern of businesses has to do with the availability of long-term funds to finance their long-term projects, most of which are capital intensive. 

Road construction and housing in particular among other projects require long-term funds but business owners are forced to go for short-term facilities to finance such projects because the banks are not willing to do so. 

On loan syndication, Mr Edgal said many banks in the country were unable to raise the kind of capital needed to finance such long-term and highly capital-intensive projects because of the sizes of the banks in the country and their operational capital base. 

However, he noted that banks such as First Atlantic had the expertise to form strategic alliances with other financiers outside the country to raise long-term capital for long-term projects in the country. 

Consequently, he said the banks also had to develop some more skills and capacity in that area to help solve the challenge of raising syndicated funds to support long-term projects.

Speaking on the theme: ‘Unlocking Finance for Infrastructural Development,’ the United Kingdom (UK) Minster of Trade and Industry, Mr Lord Livingston, said: “Uncertainty destroys confidence and increases risks. Risk also increases the required rate of returns which leads to a high cost of investment. That is the reason why many governments over the world are unable to attract investors consistently.” 

“A number of British-based companies are in Ghana to invest. The UK believes in partnerships that combine oversea expertise and local skills,” adding that, “Ghana can gain expertise from Public Private Partnerships (PPPs) with the UK and use the expertise to market itself as the hub of infrastructure development in Africa.” 

While acknowledging the opportunities of Ghana, he said: “Ghana has huge potentials but things have to be done well to attract and sustain investment.” 

He said Ghana had to be the hub of business in Africa in view of its resources and central location and noted that in spite of the challenges facing the country, “Ghana can bounce back.” 

The country is facing a number of challenges, including declining economic growth, fiscal deterioration, macroeconomic instability and mounting public debt. 

The slowdown of the economy is driven by the slow growth of industrial production and services. 

Ghana is also facing serious macroeconomic instability, caused mainly by the large fiscal and current account deficits, reinforced by a hamstrung monetary policy and external shocks. The instability was reflected in exchange rate volatility, soaring interest rates, rising inflation, and mounting debt and debt-servicing costs. Inflation rose from 8.8 per cent in December 2012 to 16.4 per cent in January, 24. 

Infrastructure is at its worst state and it is estimated that the country requires an average of US$1.5 billion annually for the next 10 years to fix that gap.