Redirect funds to real sector — Prof. Assuming

An Economist and lecturer at the University of Ghana, Prof. Patrick Assuming, says the government must redirect more funding to the real sector of the economy as the sector holds the key to economic recovery.

He explained that while the government is successfully raising funds through treasury bills, too much of this money is being absorbed by the government itself rather than being made available for businesses to borrow and invest.

This situation, he said, stifles private sector growth which is critical for sustainable economic development.

By redirecting funds towards these sectors, he said businesses in these areas will have access to capital to expand and grow, which in turn will boost overall economic activity.

Speaking in an interview, Prof. Asuming said, “we have to redirect more funding to the real sector. While it is positive that treasury bills are oversubscribed - if we are only mobilising funds and directing them to the government without channeling them to businesses, then we are not addressing the core issue.

It’s important to resolve the challenges facing the real sector, which have contributed to high Non-Performing Loans (NPLs). By doing so, financial institutions will be more inclined to start lending to the private sector,” Prof. Asuming said.

The real sector refers to the part of the economy that involves the production of goods and services such as manufacturing, agriculture and services, as opposed to the financial sector, which focuses on monetary transactions.

Limited investor confidence

He emphasised that although investor confidence was returning, it remained limited, saying “Although the treasury bills market is doing well with high demand, it does not reflect healthy business activity across the economy.

The high interest rate and limited access to credit for businesses are key factors preventing economic recovery.”

He further stressed the need for the government to support local businesses, particularly through government procurement and promoting made-in-Ghana products.
 

Old Mutual Financial Services Monitor

Presenting the report, the Group Head of Knowledge & Insights at the Old Mutual Ghana Vuyokazi Madude, explained that the key objective of the Old Mutual Financial Services Monitor was to provide a deep understanding of the working Ghanaian market, uncovering financial attitudes, perceptions, and behaviour in the informal and formal sectors.

She said aside from enhancing financial inclusion, the objective of the report was to support Old Mutual’s drive to champion the financial well-being of Ghanaians.

 
Key insights

The report revealed that income security remains the top priority for Ghanaians, followed by financially assisting others, getting the best investment returns and debt management.

Additionally, only 22% of Ghanaians are very confident in the economy as compared to the 17% recorded in 2023.

Also, 80% of respondents believe that their financial situation will improve in the next six months.

It indicated that borrowing has increased relatively to 2023, with many borrowing from trusted sources.

It added that 23% of the respondents (up from 11%) have a loan from family / friends, 15% have a loan from a Susu (up from 10%) while 13% have a loan from a financial institution 5% up from the 2023 figure.