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Opinions of Thursday, 6 June 2019

Columnist: Emmanuel Tweneboah Senzu

The proposed investment industrial structure for employment opportunities in Ghana’s economy

Emmanuel Tweneboah Senzu, Director of Research at Frederic Bastiat Institute Emmanuel Tweneboah Senzu, Director of Research at Frederic Bastiat Institute

It is easier for my Ghanaian readers other than any, to concur with me that in a certain period of the history of Gold Coast, which is currently called Ghana, there was nothing like Securities and Exchange commission, neither Ghana Stock Exchange nor Insurance commission.

All these beneficiary agencies took place by a selfless efforts of motivated citizens desiring to see Ghana in a telescope as a vibrant economy in Africa, while competing effectively at the global market.

These giants as in individuals or groups has left a golden legacy as foundation of a growing investment industry of the Republic of Ghana, which we stand on such shoulders to actualize the final dream.

With such efforts, jobs got created and thereby state on the basis of empirical, the Investment market of Ghana is very elastic to innovative job opportunities, implying the expansion rate to create room for job opportunities is 80% less exploited.

Especially in a circumstance whereby the Commercial & Retail Banking industry in Ghana seems to be dwindling in job creation opportunities as at 2019.

Currently the question bordering on critical thinking is, why should we always be compelled by an external forces as a sovereign nation, before government of Ghana will make an urgent move to setup certain industries, sectors or possibly pass out required legal framework and policies for it own domestic and economic benefit.

For Instance the first Insurance company on the soil of Gold Coast was foreign owned, Royal Exchange Assurance Corporation, 31years before the emergence of Gold Coast Insurance company, which became locally owned.

Ghana Stock Exchange came into existence early 1990s, compared to the existence of London Stock Exchange, it indicate that, it took us, a period of 165years to step confidently into this market as a society in the early days and a sovereign nation after independence.

However in the current information dispensation, do we need to allow Europe to lead Africa about two to three decades ahead of technological advancement? While a right attitude and mindset could set the continent far ahead of anticipated development in the global arena based on current skill based market of the youths.

The current Investment market of Ghana is structurally government dominated in it service and promotion, which is largely seen as products of Commercial Banking, having a coordination of other sectors exploiting the market poorly, instead of the anticipation of an independent industry with a well defined regulated policy and modern legal framework as guidance.

Take for instance some products and activities of the insurance industry fall within the scope of Investment Banking, Fund management, the operations of Ghana Stocks Exchange and mostly operations of both public and privates enterprises, which fall within the operational jurisdiction of Securities and Exchange commission, which is expected to include Ghana commodity exchange, Investment Brokers and Advisers.

Then finally the official birth of Ghana Investment Promotion Center, by the Acts of parliament, yet struggling as an expert to appreciate their effectiveness and beneficial role as an agency relating to the other sector agents performance in the Investment market of Ghana.

With all these agencies established, one has all the reasons to ask, why all these institutions set-to-action in the investment sector of Ghana, yet government in and out, seems to be struggling for a successful investment attraction mechanism to boost the domestic economy, as well as the employment opportunities stagnant in such sector structured economy, while a quality re-structuring could had caused 70% job expansion of this sector as employment opportunities.

I do hereby propose that, an Act of Parliament should be enacted towards the establishment of a qualified Investment Banking Industry with Securities and Exchange Commission Regulatory Acts upgraded to distinguish the commercial and retail Banking activities from Investment Banking, which do not take deposits.

Then focus the policy framework of the commission on strict regulation to the growing dynamics of the Investment market per the advancement of financial technology in the ‘Sell Side’, which involves trading security for cash or for other securities and the ‘Buy Side’, which involves the provision of advice to institutions that buy Investment, private equity funds, life insurance, unit trusts, mutual funds, hedge funds etc.

Then a rigorous established law to oversee how the organizational structure of the Investment Industry should look like, from the front office, middle office and the back office activities not excluding boutique investment banks on sales, trading and research. This will guide a formation of a structured market of Bulge bracket Banks, Middle market and Boutique market in Ghana’s economy, creating a room for thousands of employment opportunities to boost the industry through privates and public-privates partnerships.

Finally to an automated trading, which has come to stay in a financial technological world, since it inception through National Association of Securities Dealers Automated Quotation founded in 1971 at the United States of America, resulting to Over-the-Counter trading system. In 1992 Nasdaq stock market joining the London Stock Exchange made it first intercontinental linkage of securities markets. Since then, there has been proliferation of automated trading systems, globally.

Over-the-Counter style of trading, makes it easy for more companies to be enlisted onto the exchange market with a low entry fee comparable to the auction market approach of Ghana Stock Exchange, with a single designated market marker to step in to buy or sell shares, generating a weak liquidity market and low efficient trading system, with only 42 listings currently.

Which a well structured Over-the-counter trading could triple the listing at a lesser cost with a strong volatile and growth oriented market to hold high percentage of IPOs.

Emmanuel Tweneboah Senzu, Ph.D.
Director of Research Frederic Bastiat Institute
Associate Partner, OAK Forex Academy