Securities Industry Week launched

Accra, Oct. 10, GNA - Government is taking steps to review the existing Local Government Law to encourage viable municipal authorities to borrow money from the capital market through the issue of bonds. Finance and Economic Planning Minister, Mr Kwadwo Baah-Wiredu, who announced this in Accra on Tuesday, said the move would help to reduce the over-dependency of local government authorities on Central Government Budget and promote financial independence among viable local government units.

He was speaking at the launch of the first ever Securities Industry Week celebrations, which is being organized by the Securities and Exchange Commission (SEC), the Ghana Securities Industry Association (GSIA) and the Ghana Stock Exchange to educate the public on the importance of the capital market to economic development. Activities for the week would take place next month. It would be on the theme: "The Capital Market: The Missing Key to Ghana's Economic Growth and Development."

Mr Baah-Wiredu said the development of a viable bond market was a major influence in Government's decision to list the two- and three-year debt instruments for trading on the GSE. Government bonds worth three trillion cedis would be listed on GSE next week.

Mr Baah-Wiredu said the Government had also accepted in principle to divest its interest in viable State Owned Enterprises through the Exchange following the recommendations made by the Securities and Exchange Commission and a Technical Committee.

He said the preparation of Ghana Oil Company (GOIL) and State Insurance Company (SIC) for divestiture through the GSE was a clear testimony of the Government's commitment on this policy, which was expected to improve liquidity on the GSE and broaden public share ownership and participation in the stock market.

On the high lending rates despite reductions in Bank of Ghana Prime Rate, the Minister called on private sector operators to use the capital market as an alternative source of medium to long-term finance to compel the banks to reduce their spread, lower interest rates and deliver competitive services.

Government, he said, would continue to use moral persuasion to encourage banks to narrow their spread.

Mr Baah-Wiredu said the SEC would be well resourced to upgrade its regulatory and supervisory capacity of the market. Dr Nii Kwaku Sowa, Acting Director-General SEC, said the week was being marked to deepen people's understanding of how the capital market worked in a national crusade of education and involvement of all to unlock the potential of the market.

He said although there was a stable macro-economic environment, the real sector had not responded well enough to the stability, adding that high interest rates could be a reason for the low performance of the real sector.

Mr Kofi Yamoah, Managing Director GSE, said the market had overcome the bearish sentiments of the past year and was poised for good performance.

He urged small and medium scale enterprises to raise the necessary capital for their long-term expansion requirements through the Exchange. Mr Reginald France, President of GSIA, said the Association was working to increase the current market penetration rate of 1.5 per cent on the Exchange.

Some of the activities planned for the week include outreach programmes targeting university students, the investing public and firms; radio discussions and public lectures. 10 Oct. 06