Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has raised concerns about the significant threats posed by climate change to Ghana’s financial system.
He highlighted how climate-related disruptions to infrastructure and farmland could impair farmers and investors’ ability to repay loans, leading to a rise in non-performing loans that could destabilize financial institutions, particularly banks.
Speaking at the 28th National Banking and Ethics Conference organized by the Chartered Institute of Bankers (CIB) in Accra, Dr. Addison stressed the importance of resilience in the financial system. The conference, themed “Resilience in the Financial System: Navigating Horizon Risk”, emphasized the integration of ethical banking practices to address emerging challenges in the sector.
The Governor warned that the financial sector might face liquidity challenges due to climate change, further straining the system. He urged banks to prioritize climate and sustainability issues by dedicating resources to sustainable banking practices.
To ensure alignment with international standards, the Central Bank plans to engage with global bodies on environmental and social governance frameworks.
Dr. Addison also addressed the risks associated with digital banking, including data privacy concerns, cyber threats, and security vulnerabilities.
He called for robust cybersecurity measures across the financial sector and encouraged banks to invest in advanced technology and capacity-building initiatives to support digital transformation while maintaining security against breaches.
Mr. Kofi Adomakoh, President of the Ghana Association of Banks and Managing Director of GCB Bank PLC, echoed the need for ethical practices within the banking sector. He advocated for collaboration between banking institutions and the Central Bank to tackle these issues.
Adomakoh also highlighted the potential of advanced technologies, such as artificial intelligence, to address ethical and cybersecurity threats effectively.
He commended innovative initiatives like the introduction of a new curriculum aimed at equipping bankers with the skills necessary for the digital era.
Meanwhile, Mr. Benjamin Amenumey, President of CIB Ghana, identified cybersecurity vulnerabilities as a significant challenge for banks adopting digital technologies. He emphasized the need for robust internal controls and cybersecurity frameworks to mitigate these risks.
Amenumey also urged financial institutions to enhance credit risk assessments and strengthen loan recovery mechanisms to address the problem of non-performing loans, ensuring the financial sector remains stable and resilient.