The Financial Services Sector and Economic Growth in SSA: Insights from Ghana

This paper examines the role of financial services sector in the economic development of sub-Sahara African (SSA) countries and the myriad of factors inhibiting the sectors contribution to economic growth. It unpacks how regulatory inconsistencies and restrictions in West Africa have curtailed capital formation in Ghana and less than optimum contribution of the sector to economic growth. The paper suggests that excessive regulations and weak enforcement of rules, government bureaucracy and corruption, negatively affects a country's financial system. It is, therefore, necessary to balance the need for stronger regulation with appropriate levels of sector involvement in the regulatory process that supports the growth of the financial system. Participatory regulation requires that regulators proposing regulatory changes should hold consultative forums involving individuals from the private sector, corporate and private users of financial services, experts and service providers (including accountants, auditors, consultants, commercial lawyers) who can add value to the regulatory process. These issues present a number of implications that are discussed.