- January 22, 2023
- Posted by: Ato
- Category: Economics
The new President of the Chartered Insurance Institute of Ghana (CIIG), Solomon Lartey has urged all players in the financial industry to unite in their fight against the Domestic Debt Exchange Programme.
Speaking at his investiture as the new president of the Institute of Ghana, Mr Lartey, who is the CEO of the Africa Sureties and Insurance Advisory Company) said the financial services industry including insurance, banks, securities and pensions companies must come together and speak with one voice to arrive at a suitable solution for the domestic debt exchange program (DDEP), adding that the financial services industry is one and extremely intertwined.
‘In fact, we are different sides of the same coin. Whatever affects one side, affects the other as well,” he stated
He said insurance companies would not be able to meet obligations with total liabilities of over GH¢5.96 billion and more than 7.5million insurance policies would be affected if they are not exempt from the exchange, adding that thousands of people could also lose their livelihoods.
“Insurance companies (life and non-life) pay over GH¢4.3million worth of claims to companies and individuals on daily basis. This also would be lost. Note that these figures do not include pensions, health and securities, the picture is much worse than it seems,” he pointed out.
The CIIG president said it would be sad to see all the gains made to increase insurance coverage to more than 40 per cent destroyed due to this debt exchange programme.
Turning his attention to the banking sector Mr Lartey said 17 of the country’s 23 commercial banks would have their capital adequacy ratios fall below 10 per cent and require new capital injection of more than GH¢16 billion to be able to stay in business.
He said Banks losses could be as high as GH¢14.5billion and most of them would have to downsize to keep some portfolios afloat.
“This will lead to a credit squeeze and high cost of credit. The trickle-down effect on industry and commercial activities in Ghana would be dire,” he stated.
According to the 2023 Global Risk Report by the World Economic Forum Energy supply crisis;
Cost-of-living crisis; Rising inflation; Food supply crisis and cyberattacks on critical infrastructure are among the top risks for 2023 with the greatest potential impact on a global scale.
This he said was evidenced in the current economic crisis faced by Ghana namely: high inflation, depreciation of the cedi; high fuel prices; and a high national debt necessitating another visit to the IMF and the current Debt Exchange Programs.
The Chartered Insurance Institute of Ghana is the mother body of all insurance professionals in the country bringing together practitioners from life and general insurance and reinsurance, health insurance companies, broking firms, pensions, securities and trustee firms.
Mr Lartey is the 9th president of the CIIG. He took over from Mr. Tawiah Ben-Ahmed, CEO of Sanlam Life Ghana.