Ghana’s pension sector has demonstrated remarkable resilience, with the total value of assets under management by the country’s 217 pension schemes approaching GHS 51 billion in the first quarter of 2023, according to David Abbey, the Deputy CEO of the National Pensions Regulatory Authority (NPRA).
Speaking at the Capacity Building and Sensitisation event focused on the implementation of Phase 2 of the West African Capital Markets Integration (WACMI) Project, Dr Abbey highlighted the industry’s robust growth despite the challenging economic landscape in 2022.
By the end of December 2022, pension assets in Ghana had surged to GHS 46.6 billion, representing an impressive 18% year-on-year increase in asset value compared to the previous year’s figure of GHS 39.6 billion.
This growth stands in stark contrast to the global pension landscape, which witnessed a 16% decline in total value, reaching $48.1 trillion by the close of 2022. The global slump was primarily attributed to the challenging global macroeconomic conditions and the repercussions of the Russian-Ukraine conflict.
Dr Abbey hailed Ghana’s pension industry for bucking the global trend and achieving substantial asset growth. He further highlighted the market dynamics within the sector, with private institutions managing the Tier 2 and Tier 3 pension schemes claiming a commanding 81% market share, while the state agency, the Social Security and National Insurance Trust (SSNIT), controls the remaining 19%.
While addressing the event’s participants, Dr Abbey turned his attention to the integration of capital markets in the West African sub-region and urged the Ghana Stock Exchange (GSE) to embrace the development and introduction of derivatives trading.
He emphasized that the derivatives market represents the future of Ghana’s capital market and would lend crucial support to the growth of spot markets, including equities and fixed income.
Dr Abbey highlighted that Ghana possesses the necessary infrastructure and capabilities to facilitate derivatives trading, encouraging the prompt commencement of such activities to strengthen and invigorate the spot markets.
“Ghana already has the systems in place to undertake derivatives trading, so let’s start trading derivatives to support and grow the spot markets,” he noted.
The substantial growth in Ghana’s pension assets underscores the industry’s resilience and potential amidst challenging global economic conditions. As the sector continues to evolve, the introduction of derivatives trading can provide additional avenues for diversification and deepen the vibrancy of Ghana’s capital market.
Norvanreports