Financial sector restructuring was a necessary evil – Lecturer at MIG Business Forum

A lecturer at the University of Ghana Business School, Dr. Godfred Amewu, has defended the recent domestic debt exchange programme and the banking sector clean-up undertaken by the government as unavoidable.

Speaking to the press at the Maxwell Investments Business Forum (Vol. 2), Dr. Amewu argued that for every financial system, after a period, authorities will need to review it, assess what is working and what is not working, and undertake corrective actions.

“Restructuring, whether DDEP or banking clean-up, is part of the process. After a while, you need to revisit to find out which part is working and which part is not working and restructure either through regulations or any other means possible. So it’s normal; you can’t avoid it,” Dr. Amewu said.

He observed that although the immediate impact of financial restructuring may be harsh, in the long run, it will place the market in a better position.

“When it comes, we’ll bear the repercussions and consequences, but we’ll come out better, and I think it’s good for any economy. If you don’t restructure, if you don’t make changes within your policies and other plans, you will be stagnant.”

Dr. Amewu also higlighted the dyamic nature of financial markets, stating that financial instruments that people used to invest in in the past, are not what people invest in now.

He emphasised the need for diversification by individual investors as they plan their finances and retirements in order to protect their incomes and minimise risk.

“As an individual, if you don’t diversify and put all your eggs in one basket, when the risk strikes, you could lose, and you might even lose everything.”

“You can put some into Treasury bills, a bit into real estate, a bit into fixed-income securities, and the equity market. You can even look at the cryptocurrency market; they are all diversification so that you can bring the returns together, and when the risks strike at one end, the other end will be available to cushion you,” he explained.

On his part, the CEO of Maxwell Investments Group, Dr. Maxwell Ampong, posited that despite market volatility, Ghanaians, particularly the younger generation, must act now to ensure their future by making investments in financial instruments.

“Investments or where you are putting your money is like breathing. You cannot avoid it. You have to choose one way or the other to get some oxygen into your lungs, or you die. It is the same with money; it is the same with investments; it is the same with your spending; it’s the same with your finances. You have to find a way to go around it,” he stated.

“Volatilities in the market are inevitable. Even the very rich countries are experiencing difficulties. How much more are we who are considered to be low-income? It’s something that we have to live with,” he added.

He asserted that there is no investment that is perfectly safe, adding, however, that investment risks can be minimised through diversification.

Dr. Ampong explained that the purpose of the forum was to bring together stakeholders to deliberate on how individuals, households, and governments can adapt to such market uncertainties.