As a matter of urgency, Ghana must “deregulate the financial sector,” reducing government interference, Emmanuel Acquah, co-founder, Africa Centre for Entrepreneurship & Youth Empowerment (ACEYE), has posited.

He said the country had “been good at fighting for political freedom because that’s where the political actors have the space to flourish.

“But we’ve not been good at promoting economic, and its subset, entrepreneurial freedom, where the private sector can thrive with ease.”

He questioned how government interventions by way of tightening regulations, for instance, have rightly addressed problems in the financial sector, inviting his audience to compare the current situation to “what used to be in the past when banks had the freedom”.

Too much regulations, Acquah said, stifled innovation and creativity across fields, disciplines, and industries.

Acquah spoke during a ACEYE Public Policy Value Rating presser in view of the 2024 general elections, held at their headquarters in Dome, Accra.

Indicating anarchy was not what he was advocating, he observed the obvious inconsistency in enforcing existing regulations, illustrated by the financial sector cleanup of 2017/2018 where struggling and defaulting banks and finance houses were shut down by government.

“The funny thing is when an entrepreneur makes a mistake, the government is so quick to punish the indigenous or local businessman. But look at what the central bank has done – the losses – who is going to punish those actors?” he quizzed.

“There are no permanent solutions. There are incremental trade-offs. If you give [local businesses] the freedom to operate [with time, they will prosper].”

Emmanuel Acquah lamented the minimal capital required to open a bank in Ghana, and the limitation is presented to investors.

“I think GHS400 million. I mean, how many indigenous or local entrepreneurs or investors will have that kind of money? In actual sense, if you reduce it, you’ll have lots of these people coming in,” he said.

“In the short term, you may not get the results [desired] but in the long term, you will.”

Cost of Restrictions

“When an economy is at the verge of collapsing, it gets to a point where there are so many regulations,” Acquah underlined, warning Ghana.

With freedom to operate and “pilot their ideas and all,” businesses and entrepreneurs will be incentivised into heavy production and innovation across various industries, instead of “all of the banks we have [offering] the same packages,” he argued.

Duplication

Also, he bemoaned the duplication of government institutions and ministries, leading to ineffective accountability and misuse of public funds. He implied these institutions, instead of enabling entrepreneurial freedom, obstructed it, rather.

MPR and Interest Rates

Another challenge in the financial sector, Emmanuel Acquah identified, was the Bank of Ghana setting the monetary police rate (MPR) “so high”.

“The commercial banks will go to the central bank for monies. When they come back, because they’re also in business, they have to add to their interest rate. In so doing, what happens? The rate at which they’re going to give funds to entrepreneurs also becomes very high, creating a problem where entrepreneurs cannot go for these loans,” he highlighted.

“This is also an avenue for political actors to also make some money. They cripple the financial sector then they will say, ‘Well, we can come in and offer more grants, and funds to entrepreneurs.

“So they end up creating lots of cash-transfer programmes but if you look at the impact, it’s very, very low.”

The ACEYE executive challenged, “Anytime any government says they’ve created or supported this number of jobs, let’s ask about how many jobs or businesses they have also collapsed as a result of their intervention. That’s the only way we can measure how impactful their policy has been to Ghanaians.”

Emmanuel Acquah said, ultimately, “you and I know what our neighbour [truly] needs and wants more than government,” underlining the need for entrepreneurs of the micro, small, and medium enterprises (MSMEs) and upwards to have the freedom to provide innovative goods and services to satisfy said needs and wants.