THE ENTREPRENEURSHIP TALE IN GHANA’S FINANCIAL SECTOR; LESSONS LEARNED [ARTICLE]

As the year draws to a close, 2019 can best be described as “the climax” of eventful happenings for Ghana’s financial sector in the past 3-years.

• The years 2017-2019 have unfolded a raft of financial regulatory measures that have led to the revocation of licenses, forced mergers, winding up of institutions as well as stranded depositors. This piece is not meant to continue the blame game, as this will not solve the current predicaments in the industry.

• Contrary to blame, this piece is set to reveal a side to the discussion that may have eluded most individuals (employees, depositors, general public) and institutions (regulators, regulated).

• One thing is sure, the dust will definitely settle, and the key takeaways should be the lessons learned. Going forward, this piece suggests some measures aimed at preventing reoccurrence of this unfortunate incident.


As the year draws to a close, 2019 can best be described as “the climax” of eventful happenings for Ghana’s financial sector in the past 3-years.


The years 2017-2019 have unfolded a raft of financial regulatory measures that have led to the revocation of licenses, forced mergers, winding up of institutions as well as stranded depositors. This piece is not meant to continue the blame game, as this will not solve the current predicaments in the industry.


FIRST AND FOREMOST, ENTREPRENEURS IDENTIFY OPPORTUNITY OR SITUATIONS THROUGH WHICH PROFITS CAN BE GENERATED. SECONDLY, ENTREPRENEURS ARE SET OUT TO ALMOST ALWAYS DO SOMETHING DIFFERENT RATHER THAN FOLLOW THE NATURAL ORDER. LASTLY, TAKING ON RISK IS A NECESSITY FOR AN ENTREPRENEUR. AS POSITIVE AS THESE QUALITIES MAY BE TO THE SUCCESS OF ANY ENTREPRENEURIAL VENTURE, THE EXTREMITIES ARE THE SELF-SAME REASONS FOR COLLAPSE OF MANY OF THESE VENTURES.

Contrary to blame, this piece is set to reveal a side to the discussion that may have eluded most individuals (employees, depositors, general public) and institutions (regulators, regulated).


One thing is sure, the dust will definitely settle, and the key takeaways should be the lessons learned. Going forward, this piece suggests some measures aimed at preventing reoccurrence of this unfortunate incident.


One thing is sure, the dust will definitely settle, and the key takeaways should be the lessons learned. Going forward, this piece suggests some measures aimed at preventing reoccurrence of this unfortunate incident.


The Entrepreneur


A number of Political Scientists and Economists have contributed immensely to helping us understand who an entrepreneur is and what entrepreneurship entails. Notable amongst these names are Richard Cantillon; an Irish-French economist, Jean Baptiste Say; a French Economist, Joseph Schumpeter; an Austrian-American political scientist and Peter Drucker; a US business consultant. As many as the contributors to this area of learning may be, there are some foundational facts that run though the writings of almost all these great minds.


First and foremost, entrepreneurs identify opportunity or situations through which profits can be generated. Secondly, entrepreneurs are set out to almost always do something different rather than follow the natural order. Lastly, taking on risk is a necessity for an entrepreneur. As positive as these qualities may be to the success of any entrepreneurial venture, the extremities are the self-same reasons for collapse of many of these ventures.


Entrepreneurship Boost in Ghana’s Financial Sector


The “do something different” drive of entrepreneurship is the major driver of innovation in many entrepreneurial pursuits. Ghana’s financial sector is testament to this innovative growth spurt, as entrepreneurs have contributed significantly to the development of the sector. The innovation seen in this sector spans the emergence of various individually-owned financial institutions, the repackaging of product offerings as well as the adoption of new services.


Entrepreneurial Innovation in Ghana’s financial sector has contributed immensely to the gradual transition from the early days where commercial banks were the mainstay of the industry. The sector now has a variety of active players which includes both Commercial and Rural banks, Insurance Companies, Savings and Loans Institutions and Non-Banking Financial Institutions (NBFIs). Figure 1 below gives a fair representation of the proportion of active participants in Ghana’s financial sector.



Regulatory effort at keeping pace with Entrepreneurial Innovation


Development in any sector, as witnessed in the financial sector, warrants that regulatory measures and where necessary, reforms be put in place to better protect market participants. Needful to mention that regulators cannot pre-empt happenings within an industry. Hence, though ideally one would wish regulation advances with entrepreneurial innovation, it’s a different case in the real-world scenario.


As put by Deloitte Global, “Regulation traditionally lags innovation, since in the real-world regulators often struggle to keep up with tech-enabled innovation”. Model global cases of regulation trying to keep up with innovation include the Cryptocurrency space and On-demand car services (Uber, Bolt, Yango, etc.).


Ghana’s financial industry is evidence to the lagged nature of regulatory reforms in some areas, with a number of regulatory measures coming into force after key violations have already occurred. Key amongst some lagged regulatory measures include:


FIT & PROPER, MERGERS & ACQUISITIONS DIRECTIVE. -JULY 2018FINANCIAL HOLDINGS DIRECTIVE-JULY 2018ESTABLISHMENT OF THE ETHICS AND INTE