The nation’s monetary sector property’ worth in nominal phrases has virtually doubled – recording a development of 94.96 % between the tip of 2017 and 2022; a interval marked by sector clean-ups, the COVID-19 pandemic, Home Debt Change Programme (DDEP) in addition to recapitalisation of establishments within the sector.
This was contained within the Ghana Monetary Stability Evaluate dubbed ‘Managing monetary stability dangers within the midst of a tough macroeconomic surroundings and Home Debt Change Programme’, launched by the sector’s varied regulatory authorities based mostly on audited and prudential figures from 2022 to finish first-half 2023.
The report revealed by the Monetary Stability Council – comprising the Financial institution of Ghana (BoG), Securities and Change Fee (SEC), Nationwide Pensions Regulatory Authority (NPRA) and Nationwide Insurance coverage Fee (NIC) – confirmed that the metric had grown from GH¢160billion at finish of 2017 to GH¢312.69billion at finish of final 12 months.
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The 2022 determine was 20.07 larger than the GH¢260.43billion recorded at end-December 2021, with development broadly recorded throughout varied sectors.
In 2022, the insurance coverage, banking and pensions sectors skilled notable will increase of twenty-two.3 %, 21.7 % and 19.9 % respectively through the 12 months 2022. Nevertheless, the securities sector was an exception, with its whole property declining by 2.7 % year-on-year.
There was additionally a marked lower within the sector’s property to Gross Home Product (GDP) ratio, which dropped to 51.2 % at end-December 2022 – down from 56.4 % in 2021.
This decline within the assets-to-GDP ratio was primarily attributed to mark-to-market losses in authorities bond holdings stemming from the DDEP. These losses contributed to comparatively decrease development within the monetary system’s whole property for the 12 months 2022.
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The banking trade, typically considered the monetary sector’s cornerstone, closed 2017 with whole property of GH¢110.72billion. This determine grew to GH¢238.72billion on the shut of 2022, totally on account of accelerating deposits.
Over the interval, year-on-year asset development charges averaged 15 % whereas the trade had a median 41.3 % share of Gross Home Product (GDP) and a median 74.6 % of the whole sector’s property. It’s share of the sector’s property on the finish of 2022 stood at 76.5 %.
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The securities sector, as measured by property underneath administration (AUM), witnessed a fluctuating sample through the interval into account. Whereas AUM (excluding pension funds) skilled declines in 2018 and 2019, on account of some corporations’ licenses being revoked. Nevertheless, it rebounded in subsequent years – rising by 77.44 % in 2021 to GH¢14.77billion.
Nevertheless, the sector reported a dip of two.71 % for AUM in December 2022, as mark-to-market losses, amongst others, took a toll.
Together with pension funds, the whole AUM reached GH₵49.5billion by finish of 2022. Nonetheless, the AUM-to-GDP ratio (excluding pension funds) remained modest at 2.4 % for end-2022. The securities sector’s share within the monetary system’s property stood at 4.6 % in 2022.
Insurance coverage sector
The insurance coverage sector demonstrated constant development through the years, with whole property reaching GH¢12.24billion in December 2022 from GH¢4.65billion in 2017.
The sector’s property averaged two % of GDP through the interval underneath overview, whereas its share of the monetary sector has grown steadily from 2.9 % in 2017 to three.9 % at finish of final 12 months.
In 2022 the insurance coverage trade noticed a 25 % development in gross premiums, reaching GH¢6.56billion. This development was attributed to the NIC’s digital efforts and upcoming Motor Insurance coverage Database and Marine and Aviation Insurance coverage Database (MAID), with the Minimal Capital Requirement (MCR) improve by the regulator additionally anticipated to strengthen the trade and enhance the insurance coverage penetration charge – which has remained at 1 % over the previous half-decade.
Retention ratios barely dropped in non-life and life sectors, however remained inside reinsurance pointers. Non-life went from 70 % to 68 %, whereas life was at 88 %.
The pension sector’s share of property has steadily elevated over the interval, pushed primarily by important development in non-public pension funds. Whole property grew from 20.77 billion in 2017 to 46.61 billion by finish of final 12 months.
On the shut of December 2022, the trade’s assets-to-GDP ratio stood at 7.6 % and accounted for 14.9 % of the monetary system’s property.
In 2022, the pensions trade’s AUM for the 3-Tier Pension Scheme at end-December 2022 was GH¢46.6billion in comparison with GH₵39.6billion in 2021; marking a 17.7 % improve (in comparison with 18 % in 2021). This development was attributed to elevated contributions resulting from efforts at holding defaulting employers accountable and better enrollment.
Whole non-public pension funds elevated by 23.1 % in 2022 in comparison with 27 % in 2021, reaching GH¢34.5billion at year-end 2022. The slower development in non-public pension funds was influenced by a detrimental return on investments with a concentrate on authorities securities, making up 86 % of investments.
The regulators said that they’ve been paying rapt consideration to the monetary system’s interconnectedness to establish systemic misery.
“A key attribute of a developed monetary system is the extent of interconnectedness inside and throughout the monetary system’s varied sectors, because it enhances the circulate of funds in an financial system. Additionally, interconnectedness of economic establishments offers technique of diversifying danger and sharing of technological infrastructures amongst monetary brokers… monetary sector regulators have intensified the monitoring of interlinkages within the monetary system to supply insights on the diploma of focus and sources of misery that may be of contagion impact,” a portion of the report learn.