Ghana. Pensions industry loses US$800 million in 2 years to weakening cedi
The Executive Secretary said although the cedi value of assets under management (AUM) has increased, the dollar value of those assets has fallen.
Detailing the situation in an interview with the B&FT, Mr. Esso said: “The effect of the [local] currency’s depreciation has affected the assets under management in the pensions industry. In 2020 the industry in cedi terms was about GH¢22billion, and when you juxtapose that with the dollar there was about US$3.8billion.
“Currently, we are looking at an estimate that is in 2022, let’s say in July; we are looking at an estimate of about GH¢30billion. But when you juxtapose that with the dollar that’s about US$3billion. If you look at the dollar from US$1 to GH¢10, that is about US$3billion.
“So, in terms of dollar value, our assets have been lost. We’ve lost almost US$800million in terms of the dollar value of assets under management, and that is a problem,” Mr. Esso said.
For instance, between 2012 and 2019 the assets under management of a Zimbabwean pension administrator called Minerva shrank from US$800million to US$120million.
Some industry experts have expressed concern that local pension portfolios are not resilient enough to withstand economic shocks, particularly a sovereign debt crisis.
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