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A Banking Consultant, Dr Richmond Atuahene, has advised non-banking financial institutions (NBFIs) to develop resilient strategies to help mitigate against shocks and adverse impacts during periods of economic turbulence.
That is in view of the current macroeconomic level challenges, which, according to him, had made the running of businesses in the country very difficult.
The banking consultant mentioned, for instance, the high inflation of over 50 per cent; unpredictable local currency; high monetary policy rate of 29.5 per cent; the continuous up-ward adjustment in utility prices; introduction of some ‘nuisance’ taxes; among other things, as some of the challenges that make doing business in the country extremely unfriendly.
“Whenever there are challenges, you have to develop a resilient strategy to be able to meet the challenges,” he said and added that despite the headwinds, all is not lost because in the midst of these challenges, some businesses are thriving.
“Today, resilience-building is more important than ever to ensure economic stability, a sustainable recovery, and long-term economic growth and transformation.”
Dr Atuahene was speaking at a microfinance forum held in Accra on Tuesday (April 4) on the theme: “Building Resilient and Sustainable Non-Bank Financial Institution’s Sectors in the Wake of Current Economic Challenges.”
The forum, organised by the Ghana Microfinance Institutions Network (GHAMFIN), brought together all NBFIs to share their collective achievements, challenges and elicit useful feedback from stakeholders as well as the regulator and policy maker towards developing a more robust and sustainable sector.
He said resilience and sustainability of NBFIs can be enhanced through good corporate governance practices, effective board oversight, and upgraded technological infrastructure.
Again, he mentioned improvement in long-term investment human capacities; technical expertise and competencies; mindset changes; enterprise risk management; and information technology; improved communication and awareness; or action plans to address certain hazards such as what he described as ‘heat action plans’ and recover from shocks.
In terms of the workforce, he said training and skill development can play a key role by updating procedures and practices for deposits mobilisation, efficient credit delivery and loans recovery using information technology.
“However, such a transition in any NBFIs sector requires an enabling environment of business-friendly policies, laws, lower inflation, reduced monetary policy rates and reasonable taxation schemes, as well as a stable, risk-aware and transparent financial systems,” he said.
Dr Atuahene said poor corporate governance was one of the major causes of the collapse of some banks and NBFIs in 2017.
To prevent future occurrences, he advised NBFIs should adopt good corporate governance practices which are essential for small and medium businesses, as they set the standards of ethical behaviour and created transparency in decision-making.
He said for resilient and sustainable business, NBFIs required an effective board of directors, adding that “NBFIs are expected to play a pivotal role in helping executive management adapt their organisations to the country beyond the current economic crisis and oversee how resilience is built into all aspects of the NBFIs businesses.”
Dr Atuahene said “NBFIs must prioritise their enterprise risk management process to stay on top of numerous critical risks they face every day. NBFIs’ risk management goes beyond compliance, as banks must be aware of strategic, operational, pricing, liquidity and reputational risks.
These risks to NBFIs are dynamic, requiring a powerful and flexible risk management programme.”
