Mutual Funding: Impact on the Ghanaian Economy” (a Case Study of Selected Mutual Fund Companies in Ghana)

Only available on StudyMode
  • Download(s): 27
  • Published: September 27, 2011
Read full document
Text Preview

Over the years in Ghana, the private sector has had it difficult raising capital and adequate funds for investment and other business activities; this led to the undertaking of a number of financial sector reforms by the government. The emergence of mutual funds into the Ghanaian financial sector has been as a result of these reforms. This is to facilitate capital generation and savings mobilization for the private sector to help them accomplish their organizational objectives. It has become evidently clear that, to achieve development in the economy in terms of high gross domestic product (GDP), a better per capita income, less unemployment and reduction in inflation, the private sector of the economy should be encouraged to lead in the generation of wealth.

Capital for investment in this country (Ghana) is either sought for internally or externally but the Ghanaian government like its’ counterparts in other African countries have been relying heavily on external funds from developed economies and donor communities to be able to implement public sector development policies. This has not been so easy in recent years due to the diversification of these funds to countries such as China and other Asian countries that are now better investment destinations. Due to the shortfalls in the inflows of expected capital from external sources, government has been competing with the private sector over the limited funds generated internally and this tends to virtually crowd out the private sector. The former governor of the Bank of Ghana in his address titled; Liberation of Ghana’s Financial Service Sector: The role of overseas banks, 2003, stated among other things, that the heavy domestic borrowing by the government to finance deficit has crowded out the private sector finance. The bulk of resource from the banks is absorbed by the public sector. Government in an attempt to mop-up the excess funds...
tracking img