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Weak risk management led to banks collapse – Bank of Ghana

Business News of Tuesday, 13 August 2019


Evelyn Kwatia Sleoelf

play videoHead of Risk Management for Bank of Ghana, Evelyn Kwatia

The Bank of Ghana within the space of two years collapsed 16 banks and merged five other banks into a Consolidated Bank of Ghana Limited. These Banks were undercapitalized as a result of poor cooperate governance.

Head of Risk Management for Bank of Ghana, Evelyn Kwatia in an interview with Ghanaweb associated the Banking crisis to weak risk management.

She made this revelation on the sidelines at the ongoing Africa Convention in Quantitative Methods and Risk Management in Accra. Evelyn Kwatia said.

“Some of the issues that affected the financial sector that we saw some banks collapsed or being taken over was a result of weak risk management in the respective banks”

The 5-day Africa Convention in Quantitative Methods and Risk Management event is organized by leading companies and institutions worldwide interested in sharing knowledge and the best practices on risk analysis and modelling across business and academic environments.

Participants of this convention will not only be certified internationally as Quantitative Risk Managers but will also have the opportunity to learn from world expects who have extensive practical experience in Risk Management.

Evelyn Kwatia reiterated the need for every institution in the Ghanaian economy to take risk management serious, she added that

“The moment you are able to identify your risk, you are able to mitigate your risk, you will derive better benefits and you will be able to achieve your strategic objective of that organization. Risk is very key, in big data and every aspect of our lives risk is very key. Every institution needs to take Risk management very serious”

Topics to be discussed at the seminars will include Banking risk, Operational risk, Innovation and IT risk among several others. The event hosted by University of Professional Studies (UPSA) will last from August 12th to August 16th.

Ghana needs more efficient spending to fix gaps in education

The Millennium Development Goals were announced to the world in the year 2000. They marked a significant milestone in instituting a goal-based approach towards development. In terms of policies, they have arguably been the most successful in driving the world’s agenda towards global development.

But when it comes to education, the extent to which they made a difference after 15 years remains inconclusive. In 2015 the Sustainable Development Goals replaced the Millennium Development Goals. Goal number 4 is dedicated to education. It seeks to ensure inclusive, equitable and quality education and promote lifelong learning opportunities for all by 2030.

This goal is guided by seven outcome targets. Among these are achieving universal primary and secondary education; providing equal access to technical or vocational and higher education; providing relevant skills for decent work; and ensuring universal youth literacy.

Setting global goals and targets alone might not be enough. It is important to understand how much it will cost to realise the education goal. Implementation lies mainly with member states – but do member states have a full picture of what they have signed up for? How much will be needed to achieve the goals? Can it be afforded? What will be the sources of finance?

In a study I co-authored with Obaa Akua Konadu, a development policy analyst, we addressed these questions with a focus on Ghana. The study quantified what Ghana needs to achieve the goal on education. We did this by estimating an education performance gap and the fiscal capacity needed to address that gap.

The results suggested that Ghana faces more of an allocation and efficiency challenge rather than a resource challenge to attain Sustainable Development Goal 4. While the top-performing countries are, on average, spending less of their gross domestic product (GDP) on education and achieving more, Ghana is spending more but achieving less.

Our findings give an indication of what Ghana has to do to achieve the Sustainable Development goal on education.What we measured

We estimated an education performance gap by taking the difference between the current state of education indicators in Ghana and the targets that goal 4 seeks to achieve.

The indicators we included covered access to education, quality of education, and the state of equitable and inclusive education. The indicators make up the main governance targets for education in SDG 4, and are measured by primary and secondary completion rate (access), teacher pupil ratio (quality) and gender parity (inclusiveness).

We used World Bank data from 2014 – that is, prior to the adoption of the Sustainable Development Goals. The selected indicators are measured in different ways so, to have a comparable index to estimate an education performance gap, the indices of the respective indicators were standardised to a common measure ranging from 0 – 100. These were then aggregated to represent the overall education scores.

Ghana had a score of 76.60. For comparison, a benchmark (90.58 performance points) representing the average score of the top five performing countries – Georgia, Indonesia, Moldova, Sri Lanka, and Vietnam – within the low and lower-middle income countries categorisation was used. The difference between the average score of the top five performing countries and Ghana’s score gives an idea of the nation’s education performance gap with respect to attaining the SDG 4.

To estimate the amount of money needed to achieve the benchmarked education performance level, we placed a monetary value on these scores. We did so by simply matching the performance scores with the respective expenditure on education as a percentage of GDP. To compare, we adopted a 4.18% average expenditure on education as a percentage of GDP by the top performing countries. This, all else been equal, represents the average investment required to achieve SDG 4 in all countries within the low and lower-middle income categorisation.

We found that Ghana spends 1.98% more of its GDP on education compared to the top five performing countries (4.18%) as well as 0.16% more than the recommended standard of investment set by UNESCO to ensure quality education.

So Ghana’s problem is not that it is not spending enough. Rather, it faces an allocation and efficiency challenge if it’s to meet SDG 4.Next steps

The study revealed that the major causes of Ghana’s comparatively lower education performance score included low completion rates recorded at 68.70% for males and 63.69% for females at the secondary level.

There were also gender imbalances especially at the tertiary level where there is a low parity of 0.67 in favour of males. Another issue is the teacher-pupil ratio. While the top performing countries in education recorded an average teacher-pupil ratio of 1:13 at the primary school level, Ghana’s teacher-pupil teacher ratio stands at 1:30.

These shortfalls seriously affect the measure of quality education. Our recommendation is that it would be prudent for the government to pay attention to these specific shortfalls and work persistently to rectify them.

It is specifically recommended that education investment in Ghana should consider addressing dropout rates at the lower secondary level and promote female enrolment at higher levels of education. Also, an increased number of good quality teachers at the primary level is critical to improve pupils’ access to their teachers.

This article was co-authored with Obaa Akua Konadu. Obaa Akua holds an Msc in Development Administration and Planning from University College, London.

Ghana: Big Boost for Cocoa Sector … As World Bank Invests U.S.$300 Million in Industry

The World Bank is set to invest $300 million in Ghana’s cocoa industry to shore up production of the crop over the next five years, a Senior World Bank Agricultural Economist, Amos Gyau has announced.

Under the Cocoa Sector Value Chain Project, the initiative is to increase productivity levels of cocoa farmers as well as promote value addition.

Dr Gyau disclosed this at the launch of the sixth Institute of Economic and Financial Journalists (IFEJ)awards dubbed the ‘Flamingo Awards,’ which seeks to recognise the achievement and contribution of business and financial journalism practice in the country.

This year’s award which is on the theme, ‘Towards agribusiness and sustainable development goals’, and opens from now till September 12, 2019, covered stories and articles written by members in good standing of IFEF from July 1,2018 to June 30, 2019.

The award categories include agribusiness, finance, manufacturing, Information Communication Technology, tourism, development, and local economy.

Dr Gyau explained that the government had approached the World Bank to support the country to increase her cocoa production and thus the World Bank and government as well as Cocoa Board was discussing the modalities of the project.

He said the objective of the project was to help farmers increase their production levels from the current 300 kilogrammes per hectare to two tonnes per hectare over the period.

“The World Bank seeks to support the cocoa sector to double productivity in the next five years,” the Senior Agricultural Economist said, saying this would be done through the provision of better seedlings and inputs to farmers, hand pollination and educating farmers on best agronomic practices.

Dr Gyau also intimated that the annual value of the world cocoa trade amounted to about $9 billion and only 7 per cent got to the cocoa producing countries because the cocoa produce was exported in its raw state to the world market, saying it was to reverse that the World Bank intends to finance the Cocoa Value Chain Project.

Dr Gyau also disclosed that the World Bank would soon implement the strengthening of agriculture education in the country to link agriculture to industry.

He commended IFEJ for the awards which sought to recognise journalists who had excelled in reporting on agribusiness, stressing that the sector needed more attention from journalists.

The Member of Parliament for Twifo Atti Morkwa Abraham Dwuma Odoom who launched the programme urged journalists to focus on reporting on agribusiness and its value chain.

He said agriculture held good prospects for job creation and the development of the country, stressing that government was working to develop the various sectors of the agricultural value chain particularly rice to reduce the country’s importation of rice.

He said a team had been constituted to look into the development of the rice value chain and by 2023, Ghana would be rice sufficient.

The Dean of the School of Business of the University of Cape Coast, Professor John Gatsi who outlined the modalities of the award said the stories/article submitted for the award must be fair and balanced, adding that the “story/article must be ground-breaking”.

He also said the stories/articles must be supported by facts and should be able to influence public policy.

A former lecturer at the Economics Department of the University of Ghana, Dr Kwadwo Tutu who chaired the programme entreated journalists to seek expert opinion in their stories and articles.

He commended IFEJ for the awards and said it would encourage members of the association to work hard.

The President of IFEJ, Raybon Bulley said the Flamingo Awards was to honour journalists who had worked hard in writing insightful articles on the areas aforementioned.

He expressed gratitude to all the partners who had supported the awards since its inception.

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