Building resilience in Non-Bank Financial Institutions essential for economic stability, says Dr. Richmond Atuahene
The Non-Bank Financial Institutions (NBFIs) sector has been the subject of discussion in recent times, with experts calling for the creation of a more resilient and sustainable space. Dr. Richmond Atuahene, a seasoned banking consultant, has added his voice to the discourse, advocating for good corporate governance practices, effective board oversight, upgraded technological infrastructure, and quality human resources, among others.
Dr. Atuahene pointed out that NBFIs need to adopt robust enterprise risk management (ERM) processes and controls to enable them to build resilience and stay responsive to changes in the industry. Governments worldwide have placed significant regulatory requirements on the financial sector, making it crucial for banks to understand how to manage risk. The banking consultant highlighted that NBFIs must prioritize their enterprise risk management process to stay on top of the numerous critical risks they face daily. He went on to add that NBFIs’ risk management goes far beyond compliance, as they need to be aware of strategic, operational, pricing, liquidity, and reputational risks.
Corporate governance is critical for the success of small businesses, and Dr. Atuahene stressed that an effective corporate governance system ensures that policies and procedures are in place to mitigate risks and enable organizations to comply with relevant laws and regulations. He also noted that it is crucial for financial institutions, including NBFIs, to improve their managerial and risk management skills, develop workable business plans and strategies that encompass short-, medium-, and long-term plans.
With the current economic challenges, Dr. Atuahene sees a perfect window for NBFIs to find effective and cost-efficient methods of controlling expenses and streamlining processes involved, including auditing. He added that online expense management solutions offer significant opportunities to drive policy compliance and prevent fraud if it occurs.
Aside from the above, the banking consultant pointed out that an enabling environment of business-friendly policies, laws, lower inflation, reduced monetary policy rates, reasonable taxation schemes, as well as a stable, risk-aware, and transparent financial system are necessary. He believes that these measures will enable the NBFIs sector to become more resilient and sustainable.
The Ghana Microfinance Institutions Network (GHAMFIN) forum, themed ‘Building resilience and sustainable non–bank financial institution’s sector in the wake of the current economic challenges,’ was organized to address issues pertaining to the sector and throw more light on opportunities for members of the network. Yaw Gyamfi, the Executive Director of GHAMFIN, noted that the network, in collaboration with member-associations, realized the need for a periodic microfinance forum to educate, inform, and elicit useful feedback from stakeholders, regulators, and policymakers towards developing a more robust, vibrant, and sustainable sector.
Gyamfi added that the network is anticipating that most NBFIs will be affected by the current economic challenges and has been working closely with members to minimize any negative impact. The forum aims to provide opportunities for members of the network to learn and share insights on best practices to weather the current economic climate while ensuring that the NBFIs sector remains sustainable in the long run.
The Non-Bank Financial Institutions sector plays a crucial role in driving economic growth and development. However, the current economic challenges have highlighted the need for the sector to adopt measures that will enable it to become more resilient and sustainable. Good corporate governance practices, effective board oversight, upgraded technological infrastructure, and quality human resources, among others, are essential for achieving this.
