Ghana Considers $67m Monthly Debt Issuance for Pension Funds

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To ensure that pension funds are used efficiently to address Ghana’s housing delivery and infrastructure needs, the country’s government says it is planning reforms that will allow banks to issue securities for pension funds, collective investments and insurance investment portfolios.

According to Finance Minister Ken Ofori-Atta, given the long-term nature of pension funds, the government believes they can – together with other long-term funds – help make long-term funds available for infrastructure development and lending to industry and agriculture.

“There is an ongoing industry engagement to enable reforms that will allow banks to issue securities for pension funds, collective investments schemes (CIS), and insurance investment portfolios to participate in.

“This will lead to an estimated over US62 million (GH¢300million) of debt issuances every month on the Ghana Fixed Income Market by banks – which will, over time, be extended to broader corporate debt issuance,” he said.

The government, he added, intends that pension funds – in addition to other long-term fund sources such as insurance companies’ investment portfolios and CIS – be used more efficiently to solve mortgage, housing delivery, infrastructure, and other long-term needs of the economy.

Mr. Ofori-Atta, who said this at the Board of Directors of the National Pensions Regulatory Authority’s (NPRA) inauguration in Accra, was upbeat that this will go to address the situation where a significant amount of pension funds is locked up in short-term banking instruments.

“With this reform, we hope to assert that pension funds are medium- to long-term in nature and require long-term instruments.”

“The challenge is that we must start positioning our pension industry to provide that leadership for Ghana, and we must do this thinking about the future of our country and the good we can do for the republic,” he further stated.

Over the past five years, private pension funds have recorded impressive growth – from GH¢0.81billion in 2012 to GH¢11 billion last year – while SSNIT assets stood at GH¢9billion at the close of 2017.

“This phenomenal growth in pension assets under private management calls for the NPRA to better-regulate Social Security and National Insurance Trust (SSNIT), and also for SSNIT to improve its investment management process,” Mr. Ofori-Atta noted.

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