Ghana’s financial services sector is anchored on three main industries, Banking, insurance and the Capital Markets. Having recently emerged from a sector clean up, Ghana’s financial service sector is more resilient than ever buoyed by a well capitalized banks, better corporate governance and international reporting standards.
The Banking sector is currently the most dominant of the Ghanaian financial services sector with several facets Regulated by the Bank of Ghana under the Bank of Ghana Act ,2002 (Act 612).
Beyond the Universal banking, other subsectors include: The non bank financial institutions, the microfinance institutions as well as the Rural and community Banks
In the aftermath of the banking sector clean up, total assets of the banking sector amounted to GH¢129.06 billion in December 2019, representing a 22.8 percent year-on-year growth compared with 12.3 percent growth in December 2018. Similarly, the industry’s capital base remained strong a year after recapitalization as Paid-up capital went up by 11.3 percent to GH¢9.63 billion in December 2019 from GH¢8.65 billion in December 2018. According to industry players, this positive performance seen in the sector in recent times can be attributed to the timely recapitalization exercise and strengthened regulatory and supervisory role of the Bank of Ghana.
Additionally Mobile financial transactions have seen a steady rise as a result of the vice president, Dr Mahamudu Bawumia’s campaign for a digital economy. Information from the Bank of Ghana’s Payment systems statistics show that the total number of registered mobile money accounts had surged from 3.7million in 2012 to about 32.5 million by 2018. The total value f mobile money transactions had also increased by over 300 percent from GHC 594 million to GHC 223 billion as of 2018.
The growth in mobile financial transactions thus presents an opportunity for Fin Tech business to provide innovation and leadership in Ghana’s burgeoning digital financial service space.
Ghana’s INSURANCE sector gets its oversight from the National Insurance commission which currently operates under the insurance Act, 2006 (Act 724).
The Industry’s total assets were valued at GHC 6.2 billion in the year 2018 having recorded 21% growth in the industry’s Gross Written Premiums. The positive growth is expected to maintain its momentum with the announcement of new capital requirements for various players within the industry.
Per the demands of the Insurance commission, the new capital requirement for insurance companies is now pegged at GHC50 million up from a previous requirement of GHC 15 million. Reinsurers on the other hand are required to increase their capital from GHC40 million to GHC125million. Meanwhile Insurance brokers must also up their capital from GHC300, 000 to GHC 500,000. With a stronger capital base, it is expected that insurance companies can now take on bigger transactions such as those in Ghana’s growing oil and gas sector.
Insurance penetration in Ghana however remains below 2 percent far from the world’s average of 6.3 percent and the continents average of 2.8 percent. But with a growing middle class population, increased financial literacy as well as a growing working population, Investors can find opportunity in developing products to meet the anticipated growth in demand for insurance.
The Micro insurance space also presents an opportunity to investors who seek to serve the large pool of Ghana’s informal sector. In 2017, it was estimated that there were 2.82 million micro insurance policies covering 7.5 million lives and property (World Bank and FIRST initiative, 2018) and more than half of the policies are sold through mobile platforms.
Activities in the CAPITAL MARKET is supervised by the Securities and Exchange Commission established by the Securities Industry Act, 2016 (Act 929) .The Ghana Stock Exchange (GSE) was set up in November 1990 for companies seeking to be listed to raise external capital.
Other sub sectors of the Capital Market include the Ghana Commodity Exchange (GCX), the Ghana Alternative Exchange (GAX) for listing of smaller businesses and the Ghana Fixed Income Market (GFIM).
The Ghana Stock Exchange became a force to reckon with on the African market when it posted a strong 52.7 percent year-on- year growth in the year 2017 and total market capitalization of GHC 58.9 billion in the same year. The market however saw some contraction largely due to investor concerns on Ghana exiting the IMF program and the global investment community’s growing risk aversion to developing markets. This brought the market capitalization to GHC 56.7 billion as at the year ending December 2019.
Looking further ahead, the Capital Market is tipped for a positive come back with renewed confidence in the market following reforms by the sector regulator.