2 weeks Ago By News Ghana
News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.com.gh/ghanaian-banks-pursue-risk-sharing-partnerships-to-strengthen-capital-markets/Ghana’s financial sector is embracing risk-sharing agreements and capital market instruments to diversify funding avenues for businesses and reduce strain on traditional credit systems.
The strategy, championed by industry leaders, aims to enhance transparency, distribute lending risks, and attract broader investor participation amid a challenging economic climate.John Awuah, CEO of the Ghana Association of Banks (GAB), underscored the shift during the debut commercial paper issuance by Federated Commodities, a licensed cocoa buyer. He described the move as a critical step toward fostering accountability and diversified financing structures.
“In a weak credit environment, this initiative enables businesses to improve governance, open their books, and secure affordable capital,” Awuah stated.Central to the strategy is the use of commercial papers, which allow multiple institutions to share exposure to large-scale financing. Awuah illustrated this by explaining how a ₵200 million facility could be divided among banks and institutional investors, mitigating concentration risks.
“Proper diversification means no single entity bears the full burden,” he said.Collaboration extends beyond traditional banking, with a memorandum of understanding (MoU) now enabling banks to partner with venture capital and private equity firms for co-financing projects. Under this framework, a business might secure 30% equity investment and 70% bank financing, blending capital sources to support expansion without overleveraging debt.
Awuah urged businesses to rethink reliance on bank loans alone, advocating instead for long-term equity financing through stock markets or private investors. Citing global examples like Microsoft, he emphasized that ownership dilution could drive growth. “Control and scalability matter more than holding full ownership of a stagnant enterprise,” he noted.
The Ghana Stock Exchange’s recent advancements were praised as pivotal to this evolution, with Awuah calling for sustained collaboration among regulators, financial institutions, and entrepreneurs to bolster market resilience.This pivot toward risk-sharing mechanisms reflects a broader recognition of the limitations of traditional debt financing in sustaining economic growth. By integrating equity markets and institutional investors, Ghana’s financial ecosystem seeks to address systemic vulnerabilities while creating pathways for businesses to scale.
The approach mirrors trends in emerging markets where blended financing models have unlocked capital for infrastructure and innovation, though challenges persist in balancing risk appetites and regulatory oversight. As Ghana’s economy navigates recovery, the success of these partnerships may hinge on consistent policy support and private sector willingness to adopt transparent, equity-driven growth strategies. News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.
com.gh/ghanaian-banks-pursue-risk-sharing-partnerships-to-strengthen-capital-markets/.
