Regain access into International Markets-Baah Wiredu (Page29)

Story: Lucy Adoma Yeboah (June 28, 2008)



THE Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has challenged developing economies to endeavour to regain access to the international money and capital markets.
He said there was enough evidence to show that other financial support such as those from the Overseas Development Assistance (ODA) had not only been insufficient but also unpredictable and, therefore, made planning and budgetary processes difficult and burdensome.
Mr Baah-Wiredu was addressing the Commonwealth Business Council’s (CBC) Annual Banking and Financial Services Forum in London, held on the theme: “New Financing Tools for Developing Economies”.
Materials made available to the Daily Graphic in Accra indicated that the minister was invited by the Chief Executive Officer of the CBC, Dr Mohan Kaul, to address the forum and share Ghana’s experience.
Issues discussed at the forum included Unveiled New Financing Sources; Sovereign Credit Rating and Regional Bond Market; Financial Inclusion; Remittances and other Receivable; Carbon Financing and Islamic Financing.
Addressing other finance ministers, governors of central banks, managing directors, directors, permanent secretaries and chief executive officers within both the commonwealth and non-commonwealth countries, Mr Baah Wiredu stated that developing countries, especially those in the sub-Saharan Africa, were presently facing financial difficulties because of problems they faced in the 1980s.
“Renowned economists had described the 1980s as a lost decade for sub-Saharan Africa, partly because the continent lost credibility with its creditors in the era of debt crisis”, he stressed.
Mr Baah Wiredu explained that the situation made the creditors to tighten conditions and processes accessing funding from the international money and capital markets and since denied many developing countries access to these sources for finance forcing the countries to rely on inadequate Overseas Development Assistance (ODA).
He pointed out that the need to look elsewhere for additional support made the forum relevant, adding that if the affected countries were able to work to improve on the credibility issue and also pool their portfolios together, they could minimise risk levels and raise liquidity on regional basis.
Touching on available data on financial inclusion in most developing countries, the minister observed that there were indications that more that 60 per cent of the population were excluded from the formal banking services.
Citing Ghana as a case, he said there had been significant progress in both formal and informal sectors in addressing the exclusion of the informal sector from certain financial services such as the introduction of what was locally referred to “susu collectors”.
Explaining the concept, Mr Baah Wiredu said these were saving agents who went round markets and other economic centres to collect daily savings of people for kept them till the end of a month; a system, he said, that linked the business people who had no links with the banks by taking their savings and depositing them at the banks.
He commended the role being played by rural and community banks, credit unions, co-operative societies, non-bank financial institutions, and micro-banking institutions in mobilising funds.
He, however, lamented over the fact that many the developing countries had large resources which were either underdeveloped or undeveloped and also many of the people were excluded from economic activities, a situation that he said contributed to the narrowing of economic and financial activities.
Mr Baah-Wiredu stated that there was the need for developing countries to put in their best to explore into details, all potential financing sources that would lead to a diversified portfolio for the common aim of achieving fiscal sustainability in the medium to long-term.