Ghana’s securities regulator has imposed strict new limits on how much capital domestic investment funds can send abroad, a move aimed at curbing foreign-currency outflows and stabilizing the nation’s embattled cedi.
In a directive issued late Friday, the Securities and Exchange Commission (SEC) announced that, effective immediately, local fund managers may invest no more than 20% of their total funds under management in foreign securities. Funds that previously had blanket approval to invest entirely offshore now face a cap of 70%.
The regulator also stipulated that any permitted foreign investments must be in jurisdictions that share financial information with Ghana’s SEC.
The policy shift represents a significant tightening of capital controls as the West African nation, a major producer of gold and cocoa, navigates its recovery from its worst economic crisis in decades. Ghana is on track to complete a three-year, $3 billion loan-support program with the International Monetary Fund in August, a process that has required extensive debt restructuring and fiscal reforms.
Economists suggest the measure is designed to reduce pressure on the cedi by retaining more U.S. dollar liquidity within the local financial system. The currency has faced persistent depreciation, driving up import costs and inflation.
Analysts expect the directive to redirect substantial capital into the domestic bond and equity markets, potentially lowering government borrowing costs. However, some investment managers have expressed concern over reduced portfolio diversification options for clients.
The SEC has not indicated how long the restrictions will remain in place, describing them as a necessary step to “strengthen macroeconomic stability.”
