Rethinking capital allocation key to sustainable growth – Banker

Deputy Managing Director of Fidelity Bank, Atta Yeboah Gyan has urged a paradigm shift in investment strategies by rethinking the way capital is allocated to drive sustainable economic growth.

The Domestic Debt Exchange Programme (DDEP) was a crucial step in restructuring the country’s debt, however, its impact on capital allocation continues to shape the banking industry’s strategies.

Speaking at the Money Summit 2024, Mr. Gyan emphasised the need to move away from traditional asset classes and explore emerging opportunities in renewable energy, sustainable infrastructure, and impact investing.

“We have the unique opportunity to collectively chart a course towards a more sustainable and equitable future,” Mr. Gyan stated. “This requires us to re-think the way we allocate capital, from traditional asset classes to emerging opportunities in renewable energy, sustainable infrastructure, and impact investing.”

Mr. Gyan’s remarks resonated with the summit’s theme, “Investing for the Future: Re-Thinking Investment and Savings to Drive Sustainable Economic Growth,” which underscored the urgency of embracing a new investment paradigm to secure a stable financial future in the ever-changing economic landscape.

Acknowledging the multifaceted challenges facing the country, including high inflation, rising interest rates, sluggish economic growth, the threat of sovereign default, climate change, and social inequality, Mr. Gyan stressed that the traditional approach to investing and savings may no longer be sufficient.

“The path to sustainable growth and prosperity requires us to rethink our approach to investment and savings,” Mr. Gyan asserted.

“We must embrace a new ethos of responsible and forward-looking investing, one that not only seeks financial gain but also creates positive social and environmental impact.”

He encouraged investors to adopt a holistic approach to risk management, diversify their portfolios, and seek investment opportunities that align with their values and beliefs, such as environmental sustainability or social impact.

He also emphasized the importance of financial literacy, empowering individuals to make informed decisions about their investments and navigate the complexities of the financial markets.

Banks and financial institutions were urged to integrate environmental, social, and governance (ESG) factors into their investment strategies, embrace innovation, and leverage technology to enhance the efficiency and accessibility of investment products and services.

“By offering tailored investment solutions and personalized advice, financial institutions can attract socially conscious investors and contribute to sustainable economic growth,” Mr. Gyan said.

Regulators and policymakers were called upon to enforce regulations that promote transparency, fairness, and accountability in the financial markets, as well as implement policies that mitigate systemic risks and prevent market manipulation.

Mr. Gyan challenged attendees to broaden the scope of investment opportunities, suggesting alternative avenues for equity investments.

“Consider investing in the business of local street food vendors, transforming them into well-branded eateries or mini-restaurants for increased profit and a stake in the business,” he proposed.

“Have you ever considered literally investing in your children’s school for a stake in their returns?”