Ghana’s Central Bank Urges Lenders Consolidate to Boost Growth

ACCRA, Capital Markets in Africa: Ghana’s central bank expects mergers and acquisitions among lenders to increase as regulators prepare new rules that will boost the amount of cash that they need to set aside.

Capital levels in the industry are too weak to support the government’s target of reaching gross domestic product growth of at least 8 percent a year, Bank of Ghana Governor Abdul Nashiru Issahaku said by phone on Friday. The bank will publish recommendations of a committee working on a review of minimum capital requirements by the end of the year so that implementation can start in 2017, he said.

“Consolidation will only be an outcome of the upcoming review,” Issahaku said. “If you want to be in business then you must consider consolidation. If you want economic growth to hit eight percent, then you need a very strong private environment. Our banks need to mobilize businesses and strengthen the real sector for economic growth.”

The Ghanaian economy expanded 3.9 percent in 2015, the slowest pace in 15 years, according to International Monetary Fund data. The Finance Ministry said in July growth will probably accelerate to between 4.1 percent and 4.3 percent this year as new oil projects start contributing to output. Ghana has 32 banks.

Source: Bloomberg Business News