The Government of Ghana has set its sights on establishing a financial services hub in the country under the auspices of the African Development Fund (ADF), the concessional financing window of the African Development Bank Group.
This forms part of a three-year project to strengthen institutional capacity for domestic resource mobilisation and economic management.
The project, which has four components – supporting the financial system and capital market development, enhancing public financial regulations through effective treasury and credit risk management, improving system efficiency for non-tax and aid coordination, and project management – will be supported with a US$7.4m facility from the ADF, made up of a concessional loan and a grant component.
According to a report by Parliament’s Finance Committee, first component of the project will assist government to put together a comprehensive strategic plan and a business roadmap to realise the establishment of an international financial services centre (IFSC) in the country.
The work involved includes preparation of a legal framework for the IFSC. The approach is to have a dedicated enclave along the lines of the Singaporean model. There will also be the development of a risk-based supervision framework and a regulatory compliance portal for capital markets.
This is not the first time the country has attempted to establish an IFSC. A previous effort in 2007, when the erstwhile Barclays Bank Ghana was granted a licence to run an offshore financial services centre in Accra, did not succeed as there was low interest and worries that the country could become a conduit for money laundering and other financial crimes.
The government, however, sees Ghana as well placed to drive financial services growth in the sub-region. A 2018 report by PwC, the audit firm, said “there is a high demand for various financial services in Ghana. The relatively underdeveloped financial services sector in neighbouring countries is an opportunity for financial services firms in Ghana to supply such services in those countries.”
Other components of the project
For the second component, the main objective will be to reinvigorate debt and treasury management functions through the upgrading of the current debt management system, introduction of electronic filing of public debt records, and development of operating guidelines to support the recently established Debt Community Platform.
Improving system efficiency for non-tax revenue is captured under the third component, which is expected to increase collection of non-tax revenue through the acquisition of IT solution-based tools (e-monitoring platform) for non-tax revenues and development of a non-tax revenue medium-term strategic document.
There is also an aid coordination component, which entails system upgrade of the aid management platform, while the fourth component focuses on technical assistance, monitoring and audit, and general project management and coordination.
The Finance Committee’s report said the project is intended at building upon a previous institutional support project that ended in 2019. In particular, it aims at improving institutional, managerial and technical competencies to effectively prepare, implement, monitor and report on the planned priority interventions outlined in the Ministry of Finance’s Strategic Plan (2019-2023).
The scope covers new and emerging practices which aim at enhancing public financial regulation, effective treasury and credit risk management, as well as enhancing revenue mobilisation and fostering economic relations for increased foreign direct investment.
Through this capacity building project, it is expected that the Ministry of Finance will build its capacity in best practices and improve upon its work generally.