Bankers Association President Pushes for Highly Diversified Pension Investment After DDEP Shock

In a forceful push for a transformative reform in Ghana’s pension management regime, President of the Ghana Association of Bankers (GAB), John Awuah, is stressing the urgent need for pension funds and institutional investors to diversify their portfolios beyond government securities.

This call for diversification of pension funds, John Awuah says, has become necessary following the painful lessons of the Domestic Debt Exchange Programme (DDEP).

Speaking at The 2025 Money Summit, hosted by the Business and Financial Times, Awuah lamented how the haircut from the DDEP eroded confidence in government bonds, especially among pension funds and banks, who together made up the bulk of domestic investors.

“The DDEP impacted confidence, particularly in government securities, as pension funds experienced significant reductions in their valuations. And here I’m emphasizing pension funds, knowing very well that as banks, we were the greater investor population that was really hit the hardest in the DDEP,” the President GAB recounted.

Time to Rethink Diversification

John Awuah explains that given the country’s bulging aging population, there is a need for deliberate efforts to safeguard pension funds to meet expanding demands. To achieve this, he emphasized that diversification must now become the foundation of Ghana’s national investment agenda, especially for long-term investors such as pension funds.

He therefore suggested a range of alternative investment options that are gaining traction for the consideration of pension fund managers.

He maintains that it is time for pension funds to consider equity investments in private enterprises, real estate, corporate bonds and notes, commercial papers, Ghana Gold Coin, and green energy projects and green bonds

“Diversification is not just for pensioners. It’s for every institutional investor. It must be a core principle going forward,” he said.

Commercial Papers: A New Frontier for Short-Term Investing

The President of GAB touted the recent introduction of commercial papers in Ghana, calling them a viable short-term alternative to government securities. These instruments offer fixed returns and reduced exposure to government macroeconomic risk, making them attractive for liquidity management and risk-balanced returns.

“Commercial paper offers short-term fixed returns without the baggage of sovereign risk. Investors must consider this option seriously,” he said.

Green Investments: Marrying Profit with Sustainability

With global capital flows increasingly prioritizing sustainability, Awuah urged investors to pay attention to the emerging green investment space, which includes renewable energy projects, green bonds, and green funds.

He praised the Ghanaian government’s push into renewables as a catalyst that has encouraged banks and institutional investors to explore the space.

“These projects do more than deliver returns. They help us grow our economy and transition to a cleaner, greener future,” he said.

But a Word of Caution

While advocating for bold moves into alternatives, Awuah reminded investors, particularly pension fund managers, to always operate within the bounds of regulatory asset allocation guidelines, issued from time to time by the National Pensions Regulatory Authority (NPRA) and other financial regulators.

For John Awuah, the trauma of the DDEP must not be repeated. Ghana’s investment future must be broad, strategic, and diversified. By moving beyond a government-debt-dependent investment model, the country can build resilience, unlock new growth areas, and protect investor capital in an increasingly complex economic landscape.

Last Updated on April 30, 2025 by samboad