Yesterday I had the pleasure of attending the NUGS alumni homecoming dinner and launch of the scholarship fund at the British Council. It was great seeing some of my past colleagues in student leadership, some of whom I had not seen in four years. The current NUGS administration led by Michael Paa-Kwesi Adu is doing a great job.

Anyway, I had the opportunity to chat with an old friend, Edmond Kombat, past SRC president of University of Ghana and a former fixed income trader at Merrill Lynch. He asked me what I thought of the global finance system and I told him that all eyes were on the Fed. I shared my belief that I don’t think they will hike, even if they sound more hawkish, until after the election.

I asked how it was working at Merrill Lynch and he said it changed him. He felt that if we could enhance our capital markets we would transform the whole economy. He was disappointed at the slow pace of development of the GSE, the lack of bonds issued by districts and the way in which forex trading is done by retail investors instead of institutions.

I share his concerns. The avenues for people to inject capital into businesses are just not enough. This forces businesses to keep looking to the banks for credit which raises borrowing costs.

However, there are some signs of improvement. In a post I wrote in June I noted that the opportunities for trading and investing in Ghana are improving. The Ghana Alternative Exchange (GAX), the Commodity Exchange (GCX) and the GSE planning to offer derivatives trading are increasing the opportunities people have for capital allocation. Also, Mortgage-Backed Securities are coming into play. Also the finance minister is telling districts to get ready to borrow for development projects. This will add more fixed income products to the market.

With a developed capital market we will encourage savings, reduce the cost of borrowing, reduce the misallocation of capital, create more diversified (and thus less risky) portfolios, reduce central government borrowing and attract more foreign investors. I only hope that the planned reforms do not stall.