OPENING SPEECH READ BY HON. PROF. GEORGE GYAN-BAFFOUR, DEPUTY MINISTER OF FINANCE AND ECONOMIC PLANNING AT THE MAKING FINANCE WORK FOR GHANA (MFW4G) CONFERNCE HELD AT LA PALM ROYAL BEACH CONFERENCE CENTRE, ACCRA ON 16TH JUNE 2008

THE CHAIR;
COLLEAGUE MINISTERS;
GOVERNOR;
REPRESENTATIVES OF DEVELOPMENT PARTNERS;
INVITED GUESTS;
LADIES AND GENTLEMEN

It is indeed a great honour for me to perform the opening ceremony of this all important conference – Making Finance Work for Ghana (MFW4G) as a prelude to the first Making Finance Work for Africa (MFW4A) Partnership Forum to be held on 17-18 June 2008 here in Accra.

I wish to take this opportunity to welcome you all the Guests from outside to Accra and to this conference.

FINANCIAL SECTOR DEVELOPMENT IN GHANA

The Government recognises that access to affordable finance is a very important pre-requisite for the development of the economy. As you may be aware of, in the Growth and Poverty Reduction Strategy II (2006-2009), one of the main pillars identified as an anchor for the attainment of the Millennium Development Goals (MDGs) is the promotion of private sector competitiveness. In order that this will be achieved, the Government has shown a strong, sustained commitment to Financial Sector reform in recent years aimed at broadening and deepening the financial sector, particularly through reforms of the regulatory and institutional environment. Through the first round of reforms, Ghana’s financial sector has already made great progress. For example, credit to the private sector as a percentage of GDP has increased from 16.4% in 2003 to 25.8% in 2006. According to the Bank of Ghana, these improvements are largely attributable to determined regulation, significant technological advances, and more forceful risk management. It is the aim of Government that the gains made as a result of these Financial Sector Reforms will be consolidated through constant discussions with all the stakeholders in the sector on the challenges facing the sector, with the aim of providing the appropriate environment for the optimum operation of the sector, especially the non-Bank Financial Institutions.

The key challenge going forward, which cannot be stressed enough, is however the importance of inclusiveness, access to affordable finance for the poor, medium term funds for SMEs, especially small entrepreneurs, particularly those in agricultural business. To address this issue, I am informed that some of the key questions to be addressed at this event include: how to develop the Ghanaian microfinance and microinsurance sector, reduce lending risks and develop effective consumer education and financial literacy.

Ladies and Gentlemen, while the reforms in the financial sector have resulted in expansion and increasing competition in the commercial banking system, it has also been observed that the share of credit and other financial services going to agriculture and the rural population still remains very low. This situation has been attributed to the fact that the services of Rural and Microfinance institutions (RMFIs) and Rural and Community Banks (RCBs) have not been well suited to the needs and risk profiles of farmers and operators along the agricultural value chains. We recognise that while agricultural finance has been problematic worldwide, and very few agricultural development banks have succeeded over time in both servicing the agricultural sector and becoming self-sustaining, recent years have seen considerable growth in experience and diversification of methodologies. This has become the focus of our recently inaugurated Microfinance Forum. The Working Group on Rural/Agricultural Finance has held a Workshop to draw on these lessons, as well as studies undertaken in Ghana, to prepare a strategic framework and action plan for agricultural/rural finance that we intend to use as a foundation for the development of new financial products suitable for Ghana. The framework and action plan also serves as a platform for the coordination of the efforts of various programmes being undertaken in this area.

It is my hope that during this conference you would get access to the framework and action plan and share with us your ideas and rich experience in developing this important area.

MICROFINANCE IN GHANA

The Chair, Ladies and Gentlemen, as I have indicated, Government recognises that tackling poverty is one of the most effective ways to achieve all the other seven MDGs, and that microfinance is a strategy for wealth creation and poverty reduction and this underscores my focus on microfinance. The multifaceted nature of using microfinance as an instrument for wealth creation requires an integrated effort by all stakeholders. The Government therefore, in partnership with other support institutions and development partners, in the past year or so has been engaged in promoting the enabling conditions that promote microfinance as a strategy for wealth creation and poverty reduction. This support has led to a remarkable growth in the number of microfinance institutions in Ghana. Rural and Community Banks have grown from 114 in number in the year 2000 to 129 presently. In the year 2000 there were 8 Savings and Loans companies. This number has risen to 16 presently. Similarly, the number of registered financial NGOs has increased from 8 in the year 2000 to 29.

Ladies and Gentlemen, with this growth has also come various innovative products that are meant to increase outreach. It is my hope that the conference will find time to discuss some of these products and make recommendations for improvements to them.

The biggest challenge is for all of us to transform the access to financial services into strategies that will promote better livelihoods so as to achieve the MDGs.

CONSUMER EDUCATION AND FINANCIAL LITERACY
Chair, Ladies and Gentlemen, while the financial sector is undergoing a rapid expansion and growth, one issue that must start engaging our attention is consumer education and protection to safeguard the interests of consumers of financial services and empower them to know their rights and liabilities and make wise and informed decisions. I wish to emphasise that we all recognise that institutional aspects of consumer protection measures is the ethical commitment of financial institutions to pro-client principles. These principles cover quality of services, dignified treatment of clients, truthful and transparent easy-to-understand information, appropriate pricing, protection from unethical, abusive and predatory practices and privacy of client’s personal information.

Ladies and Gentlemen, I wish to inform you that it is in recognition of the importance of the protection of the client from these negative tendencies that Consumer Education and protection has recently been launched in Ghana and is on-going. We are also working vigorously at a Financial Literacy programme, and this will be rolled out very soon. We also recognise that extensive work has been done in this area by the Consultative Group to Assist the Poor (CGAP) and the Small Enterprise and Education Promotion Network (SEEP), and it is my hope that your deliberations will be guided by the work of these organisations.

MICROINSURANCE
Ladies and Gentlemen, a new development in the microfinance industry is the realization that in addition to providing credit and savings services, it is possible to provide the poor with a third financial product- microinsurance, as a tool for mitigating some of the risks associated with lending to the poor. It has been realised that providing microinsurance has some key benefits. One key example is the protection of the loan portfolio against default in the case of the death, or easing the financial burden of farmers in the case of drought. We are convinced that this adds value to the provision of financial services and can therefore be beneficial in building customer loyalty and allow expansion into new markets that might previously have been too risky to lend to.

Once again let me welcome all the invited Guests to Accra. I hope you will have a pleasant stay here.

Chair, Ladies and Gentlemen, I now declare the conference open and wish you fruitful deliberations.

Thank you.