Commitment needed for financial sector development – BoG Governor

Dr. Ernest Addison, the Governor of Bank of Ghana (BoG) has revealed that vibrant commitment by stakeholders is needed to harness financial resources for the growth and development of the financial sector.

The Governor speaking at the 40th Anniversary Celebration of the Akuapem Rural Bank at Mamfe Akuapem in the Eastern Region disclosed that the BoG will continue to initiate and implement policies tailored to improve banks’ operations and build customer confidence in the financial sector.

“Developing a vibrant financial sector that is capable of harnessing financial resources available for growth and development requires the commitment of all key stakeholders.

“The Bank will continue to pursue policies and programmes aimed at improving the operational environment to build customer confidence and ensure the stability and soundness of the financial sector” he said.

The Governor further hinted on the need to address lingering corporate governance and risk management weaknesses within the rural banking sector. The Corporate Governance Directive and Risk Management Guideline for rural and community banks was published to address these issues, he disclosed.

Furthermore, the Corporate Governance Directive is expected to establish sound corporate governance principles and best practices within the rural banking sector.

“It is expected to promote governance systems that will create the environment for individual institutions to undertake their licensed business sustainably, serve the best interest of depositors and other stakeholders and enhance overall corporate performance, accountability, and public trust.”

Additionally, Dr. Addison stated that the Central Bank has made several improvements to the surveillance and supervision regime with a positive impact on the rural banking sector’s performance.

These performances, he disclosed, were propelled by deploying several tools available to the Bank of Ghana, including regular on-site examinations, improved quarterly performance reviews, management visits, follow-ups and improvement in the approvals and authorisation regime, among others.

In addition, Dr. Addison highlighted the banking sector clean-up in 2017 was necessary at the time. This according to him, was due to the prevalence of system risks across several institutions, including some Rural and Community Banks (RCBs).

 

Also, some of these risks include impaired capital, low asset quality, liquidity crises, and poor governance structures, which threatened depositors’ funds and undermined efforts aimed at promoting financial inclusion, he disclosed.

He further stated that after the initial clean-up of the banking sector, the Bank collaborated with the ARB Apex Bank to reposition RCBs to better realign with the founding objectives of fostering rural economic development.

“Given the unique nature and expected role of RCBs in the financial sector, the Bank has rolled out some initiatives, including an ongoing review of the Apex Bank model as well as the regulatory and supervisory frameworks to restructure the rural banking concept in Ghana.”

Furthermore, Dr Addison disclosed that Ghana was among the leading African countries to enter the pilot phase of rolling out digital currencies.

The E-Cedi, the Governor disclosed, is the first general-purpose Central Bank Digital Currency in Africa. He further indicated that it would complement and serve as a digital alternative to physical cash, in line with the Government’s ‘Digital Ghana Agenda’.

Dr Addison then averred the E-Cedi would be tested in trial phases with banks, payment providers, merchants, consumers, and other stakeholders for a nationwide rollout as it would present an opportunity to build a robust, inclusive, competitive, and sustainable financial sector.

“We expect that all rural and community banks will collaborate with ARB Apex Bank to leverage the opportunities available with digitisation within the payment ecosystem.”

The Governor, Dr. Addison, used the opportunity to also“applaud the promoters, past management teams, and the current directors of the bank for this achievement”, as 40 years of rural banking was remarkable, he disclosed.