BoG pledges stability to attract investment, urges stronger Africa–Asia partnerships

Dr Zakari Mumuni, the First Deputy Governor of the Bank of Ghana (BoG), has reiterated the central bank's dedication to preserving a stable and credible monetary setting to lure foreign direct investment into Ghana. He highlighted the bank's part in preserving monetary and financial stability as a complement to fiscal endeavours aimed at establishing a conducive atmosphere for investment.

However, Mumuni emphasized that the Bank of Ghana and other central banks within the region are unable to determine the commercial success of individual investment endeavors.

At the High-Level West Africa–Asia Capital Dialogue in Bangkok, Thailand, on the occasion of the Annual Meetings of the International Monetary Fund and the World Bank, Mumuni addressed the obstacles hindering Asian capital flows into West Africa and the steps necessary to unlock heightened investment. The dialogue, organized by the ECOWAS Bank for Investment and Development (EBID), aimed to explore these concerns.

Mumuni underscored that central banks bear the responsibility of maintaining price stability, safeguarding financial stability, supporting efficient payment systems, and ensuring transparent foreign exchange arrangements. Just like other central banks in West Africa, he emphasized, the Bank of Ghana is also keen on innovations that enhance cross-border payments and facilitate trade and investment.

Sharing Ghana's experience, Mumuni pointed out that rising inflation, exchange rate pressures, and debt challenges had necessitated "difficult but necessary policy adjustments and significant reform efforts." He stressed that these experiences emphasized the significance of macroeconomic stability in luring and sustaining long-term investment. "Macroeconomic instability heightens risk, raises financing costs, and deters long-term investment," Mumuni stated.

Conversely, he noted that price stability, sustainable public finances, and credible institutions lay the groundwork for private sector expansion. While Mumuni acknowledged that stability alone would not yield sustainable investment, he asserted that "sustainable investment fundamentally hinges on a robust pipeline of productive opportunities and competitive businesses."

The BoG governor outlined four priorities to assist Ghana and other West African nations in attracting more investment. First, he advocated for better risk-sharing arrangements, involving development finance institutions, export credit agencies, governments, and private investors in distributing risks to those best positioned to manage them. Second, he called for strengthened project preparation, asserting that a robust pipeline of investment-ready projects is essential for drawing prolonged capital.

Thirdly, Mumuni endorsed financing structures aligned with the lifespan of investment projects. He argued that long-term investments necessitate long-term financing, while a greater reliance on local-currency financing, where feasible, could mitigate currency mismatches and enhance project viability. Finally, he called for stronger institutional partnerships that merge Asian capital and expertise with African market knowledge and investment prospects.