ACCRA, MAY 8, 2019

President of the Chartered Institute of Credit Management Vice President of the Chartered Institute of Credit Management Executive Director of Chartered Institute of Credit Management Member and Associate Members of the Chartered Institute of Credit Management

Representative of other Professional Bodies invited Guests,

Members of the Press,

Distinguished Ladies and Gentlemen


Good Afternoon, I bring you warm greeting from the Governor of the Bank of Ghana, Mr. Philip Addison, who unfortunately engagements.

On behalf of the Governor, I congratulate the chartered institute of Credit Management on the celebration of your 5th Anniversary.  It is welcoming to know that out of the 28 professional and 56 associate members of your institution, majority of them are employed in the financial sector.  I am particularly honoured to speak under the theme of your 5th anniversary celebration “Promoting a Safer and Resilient Financial system, the role of the Credit Professionals”, since this theme falls in line with what the bank of Ghana has been trying to achieve over the past few years.

Mr. Chairman, the importance of credit in an economy cannot be understated, an effective credit delivery system in the productive sectors of the economy specifically in the areas of agriculture, manufacturing, and construction have the jobs and associated increases in tax revenue for the government and ultimately growth in GDP.  Despite the benefits of lending to the above-mentioned sectors of the economy, total credits by Banks in Ghana to these sectors accounted for a combined total of 23.36% of total loans & advances in 2018, which was less than the commerce & Finance sector which accounted for a 24.59% of total loans and advances in 2018.  This underpins the narratives on Structural defect of our economy.

As the main actors in the financial intermediation space, financial institutions are at the heart of the credit delivery process. As at the end of December 2018, Gross loans and Advances by banks to its customers stood at GH¢36,543.14 million. Sadly, Mr. Chairman, despite the enormous contribution of the financial sector in Ghana towards the provision of Credit, the industry has been saddled with high performing loans (NPLs) which have threaten the solvency and survival of financial institutions.  The NPL ratio of 18.19% of banks as the end of December 2017.  These high NPLs are a major threat to the effective credit deliver and private sector growth in the economy, and bank have already responded by reorganizing their balance sheet from Loans and Advances to investment in securities, which are less risky assets.  As a result, as at the end 2018, investment constituted the largest proportion of total banking sector assets at 35.922%, overtaking loans & Advances (30.29%) which had persistence and continuously remained at No. 1 over the past years.  Even more worrying, Mr. Chairman is that the growth in credit in the banking industry has been declining over the last five (5) years with 2018 experiencing negative growth of 3.6%.


Mr. Chairman, let me provide some of the reasons that have contributed to the High NPLs in the financial sector to serve as food for thought for the members of the chartered Institute of Credit management:


  • Poor Credit and Risk Management practices such as: inadequate qualitative and quantitative analysis on loan facilities, Poor loan documentation, structuring and monitoring, inadequate collateral security, related Party lending which does not go through the appropriate leading procedure, collusion between bank staff and customers among others.
  • High and abnormal Interest rates charges on loan facilities
  • Loan concentration risk e.g. the banking sector is exposed to the one corporate entity to the tune of over GH¢ 1 billion. The facilities are not performing and thus having serious implications for the banks involved.
  • Poor national identification and address system which makes it difficult to trace defaulting customers.
  • Poor credit reference bureau data due to unreliable and inaccurate information submitted by financial institutions

Mr.  Chairman, in acknowledging the threats these high NPLs pose to the general safety of the Ghanaian Financial sector, the BoG has over the last two (2) years instituted several reforms aimed at ensuring a health, robust  and resilient financial sector intended to boast confidence of investors and the general public. Currently the BoG has been able to achieve the following:

  • Increase the minimum capital Requirement from GH¢120 million to GH¢ 400 million which have enabled banks to become more resilient and able to absorb shocks from NPLs.
  • Implementation of International Financial Reporting Standards (IFRS) 9 which uses the expected credit loss standard. This is improving on credit risk management frameworks and enabling banks effectively measure risks embedded in their credit portfolio.
  • Strict enforcement of sections 61 to 77 of the banks and specialized deposit taking institutions Act, 2016 (Act 930) which related to Restrictions on lending and investments.
  • The Capital Requirement Directive (CRD) which was issued in June 2018 has become operational since 1st January, 2019. This directive incorporates the Basel II/III pillar 1 framework for capital adequacy measurement.
  • Ensure banks do not continue to keep toxic assets on their balance sheets, by ensuring the compliance with the Loan write – off directive of the Bank of Ghana.
  • Reduce the Monetary Policy rate from 25.5% as at the end of 2016 to a current rate of 16% in a bid to reduce cost of credit.

Mr. Chairman, while a number of important steps have been taken as enumerated above, a lot remains to be done to promote a more resilient financial industry. Going forward, the BOG will continue to strengthen its regulatory ad supervisory framework and promote confidence in the financial system by:

  • Operationalising the deposit protection scheme established under the Ghana Deposit Protection Act, 2016 (ACT 931);
  • Issue a Risk Management Directive to provide and set minimum guidelines and standards for risk management for Financial Institutions;
  • Issue and strictly enforce “Fit and Proper person” requirements for bank shareholders, director, and key management personnel including Credit Managers, to promote high standards in the industry;
  • Fully implement consolidated supervision alongside revisions to the Bank’s Risk-Based supervision alongside revisions to the Bank’s Risk-Based Supervision Framework
  • Enforcing the provisions of the Credit Reporting Regulations and the borrowers and lenders bill once parliament passes them into law. These pieces of legislation should help improve the credit underwriting process and facilities enforcement of loan and collateral agreements by banks and other regulation financial institutions.
  • Improve collaboration with other regulatory and professional bodies including NIC, SEC, NPRA, ICAG, CIB and the Chartered Institute of Credit Management to help reduce gaps in the regulator framework for banking groups.


Mr. Chairman, other stakeholders in the credit delivery process have also embarked on serious reforms to improve the efficiency of the credit delivery system.  The Government through the Ghana post as introduced the digital property addressing system which ensure all locations in the country are addressed.  The Ghana Card which is still been issued by the National Identification Authority is expected to help banks in Ghana to easily establish a person’s credit-worthiness from the Credit Referencing Agencies any time they apply for a loan.  The Ghana Card and the Digital Address system together are expected to enable easily traceability of loan customers and reduce the incidence of bad loans. The government has also established financial stability council to deal with the cross-cutting issues in the financial space to ensure the stability of the entire financial system across all the sub sectors i.e. banking, insurance, pensions and funds/asset management.

Now to our credit professionals, the BoG has led the way by enacting regulations to ensure a good credit system, it is your turn to ensure that high standard of professional ethics and conduct are maintained and advanced among members of the Institute. Core values of integrity, honesty and commitment should be upheld by your members at all times.

Mr. Chairman, the course content under the chartered Credit Professional Examination including: Principle of Credit management, Financial Reporting, Principles and Practice of Rick Management, Laws and Governing Credit Practice, Advanced Corporate Lending, Debt Recover Procedure among others indicates a high level of knowledge and training before a person become a professional member of the Institute.  The technical competence of the members of the institute is therefore not in in question.  What needs to be done is translating this knowledge and expertise into the credit working environment where a lot has gone wrong over the past years.

Mr. Chairman, the incidence of credit concentration in the financial sector has the potential of crippling it, even worrying is than Banks seem to be lending to the same customers mostly with foreign ownership.  We expect credit professional to lead the way by researching, proposing and implementing innovative credit products which cuts across all business spectrums and help SMEs to grow.

The Institute has achieved a lot in the last five (5) years including providing credit management resources, education and training certification to its members but a lot needs to be done including the training of more processional members and continuous professional development of existing members.  The BoG is always ready to collaborate and partner the institute to ensure a better credit delivery system.

On this note, I once again congratulate the Institute on your 5th anniversary and I wish you the very best in your mission to lead in the development of world class credit risk management professionals in Ghana.


Thank you



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