Vice President Kwesi Amissah-Arthur has stressed the need for effective financial banking supervision and sourcing for a strong and long-term financing to accelerate infrastructural development.

“This is critical at a time when the reversal of capital flows and the decline in commodity prices may constrain the capacity of Governments to finance social and infrastructural needs,” the Vice President said in Accra.

The Vice President identified the mobilization of revenues to address social and investment needs as the primary challenge in the growth of African economies in the post global financial downturn era.

Addressing the opening session of a “conference on opportunities and challenges of financial integration in West Africa” in Accra, the Vice President said a major lesson from the global financial crisis is the importance of regional co-operation, regional policy dialogue and the harmonisation of supervision.

The conference is attracting Mr. Koaoyuki Shinohara, who is the Deputy Managing Director of the International Monetary Fund (IMF); Madam Antoinette Monsio Saye, the Director of the African Department of the IMF; and Mr. Sean Hagan, Director of Monetary and Capital Markets Department. Also in attendance are governors of central banks in the West Africa sub-region and finance ministers.

Due to the emerging risk of financial banking in West Africa as a result of the expansion of banks, the conference will draw lessons from other regions and how they mitigated the risks that came with stronger competition.

The Vice President noted that the development of sources of long term financing to accelerate infrastructural development was critical at a time when the reversal of capital flows and the decline of commodity prices may constrain the capacity of Governments to finance social and infrastructural needs.

He emphasized financial integration to allow for the growth of financial institutions and the development of a dynamic financial sector that could contribute significantly to economic development. “It provides governments, as well as private firms access to a larger pool of funding and can thereby lower the cost of credit and widen opportunities to diversify risks,” the Vice President said.

He said financial distress in one country could spill over to other countries when markets were integrated, and complex financial linkages across markets could strain the supervisory ability of financial agencies.

“It is in this context that effective supervision becomes crucial and also more difficult. The issues of cross sector and cross-border supervision have attracted attention,” the Vice President said.

He added that, the appearance of different risks due to the broadening of the scope of banking to include non core banking activities such as insurance and capital market activities had however, not yet attracted t the capacity for supervision.

According to the Vice President, the institutionalised collaboration among the four financial sector regulators is helping to identify emerging risks from financial sector activities, and also inured to the stability the financial system. He urged the conference to examine the implementation of effective cross-border arrangements, the internalization of the banking system and Ghana’s support to the West Africa Monetary Zone.

The ECOWAS region is a home to nine large pan African banks, with their core business in banking and a few venturing into the insurance and capital markets. Ghana is home to 26 banks of which 15 are foreign owned and six African. The assets of the African represents more than a third of the total assets in Ghana.