Our banks have limited instruments and diversification opportunities

Economist and Professor at the University of Ghana Business School, Prof. Godfred Bokpin, has raised serious concerns about the structural weaknesses within Ghana’s banking sector, emphasizing the limited range of investment instruments and diversification opportunities available to financial institutions and individuals.

According to him, this narrow investment landscape poses a significant risk to the country’s financial economy, undermining liquidity and limiting banks’ ability to finance growth in the real sector.

Speaking on Business News Update,on ABC News GH, Prof. Bokpin explained that Ghana’s banking system, though often blamed for underperformance, is not inherently at fault but suffers from broader macroeconomic constraints.

He cited a recent Fitch Solutions report that ranked Ghana’s banking sector as the most vulnerable among the top Sub-Saharan African economies, underscoring the urgency of economic reform.

“If you look at the wealth of our banks in dollar terms, really, it’s nothing to write home about,” he said. “Our banking sector is so small, it’s not robust enough to support the government’s economic drive.”

Prof. Bokpin called for:

Broader economic diversification, to reduce overreliance on government instruments.
Development of alternative investment assets, to stimulate private sector financing and deepen the capital market.
Stronger policy credibility and fiscal reforms, to restore investor confidence and enhance financial intermediation.
Improved regulatory oversight, to guide sustainable growth and build resilience within the financial system.

He emphasized the need for a broad-based economic strategy that shifts away from the current heavy dependence on government debt instruments. “Our economy is highly financialized on government instruments. We need to rethink. We should adopt a broad-based technique,” he advised.