Ghana bars offshore investment of pension funds over currency worries
Ghana is implementing stricter regulations on private pension fund managers seeking to invest in offshore assets due to concerns that it may exacerbate pressure on its cedi currency.
In the wake of the 2010 pension reforms, workers’ retirement contributions in the world’s second-largest cocoa producer saw substantial expansion, thanks to a tiered framework that enables private sector management of select contributions.
The majority of contributions are invested in Ghanaian assets, including Ghana government Eurobonds. However, private fund managers have been eager to explore offshore investment opportunities following the restructuring of 31 billion cedis of their holdings under a local debt rework.
Ghanaian laws permit private fund managers to invest up to 5% of total assets abroad, approximately 2.8 billion of current assets under management, though firms and authorities differ on the necessity of prior approval.
Ghana is concluding a challenging debt-restructuring process under the G20’s Common Framework initiative, having defaulted on most of its $30 billion international debt in 2022.
Despite Ghana’s economic recovery, the cedi currency has depreciated 25% against the U.S. dollar year-to-date, having already fallen around 17% in 2023.
